How Cable Television Is Handling the Internet Revolution

As Internet connection speeds have steadily improved, and as Internet video has emerged as a viable entertainment medium, technology and entertainment observers have written thousands of pages about the impending death of the Cable Television industry. What is the industry itself doing to prepare for that change? Surprisingly little, and here’s why.

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The Entertainment Business Model

Despite the periodic arrival of a shoestring budget indie that makes a hundred million dollars, the entertainment industry is still a budget-busting business. Production value aside, in order for a property to reach the general public with enough fanfare to generate interest, it needs the big names and flashy ad campaign that only money can buy.

So far, Internet viewing is incapable of providing anywhere near enough revenue to support those budgets – and that’s not something that’s going to change any time soon. Yes, there are finally pay-for-access models that generate some revenue, but online they have to compete with an enormous amount of free content. Yes, there are ad-based revenue streams, but content with ads in front of it has to compete with ad-free content.

Cable channel operators believe that their model will continue to survive as long as production budgets stay high because that and the ad-based network TV model are the only ones capable of supporting Hollywood. (Note: Kevin Spacey-led, Netflix-produced “House of Cards” might change this attitude, but it’s too soon to tell.)

The Internet Video Craze

YouTube changed the way the world made, watched, and shared content, and in doing so it attracted attention to the possibilities of online video content as a competitor to traditional cable and network TV. But YouTube also established a new genre, perfectly suited to the Internet viewing habits of 5 years ago (see this interesting study conducted in 2009), and even more suited to the mobile Internet viewing habits of today.

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The short-form Internet video is an art form in itself, and it is one of the most popular art forms of our age. While much of the “Internet versus Cable” conversation centers on versatility of access and price point, cable channel operators also know that their content faces a new competitor online – and that this competitor makes the business of delivering professional, longer-form content online far less predictable.

Portability of Content

One way in which cable television is responding to the rise of the Internet is by producing more content that can be easily ported from one medium to the other. Reality TV plays with equivalent quality on a television, a computer screen, and a mobile device. And although bona fide reality industry stars like Kim Kardashian command Hollywood-style salaries, the genre is designed for low production cost.

As a result, reality TV shows operate as a sort of bridge between the traditional television production business model and the unknown emerging reality of online content delivery. As the money in cable television dries up, or if the Hollywood budget model becomes unsustainable, cable channel operators with healthy reality franchises will be able to convert their businesses to an online model.

The Technology Solution

In some ways cable television doesn’t have to respond to the “threat” of online content delivery because the technology industry is doing that for them. The DVD business is going to dry up long before the cable model, and DVD and Blu-Ray player manufacturers have rushed to pack their boxes with Internet capability and to sign contracts with content providers to deliver their customers access to content.

The result is that the mini browser on almost any new DVD player acts as a backup plan for cable television. It may be true that fewer and fewer people will buy cable access in the same way that they do today, but most of us will still access the same content providers through applications inside our DVD player’s mini browser. And many of us will still get Internet access through the cable company.

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