It’s a given these days that people are dropping cable subscriptions in favor of other sources of content. For now the exodus from cable is a trickle, but as we have seen with other industries, things can change into a flood quickly if there is a widely-acceptable alternative to an older technology.
This leads me to speculate about what company might be the one to break the cable monopoly. My crystal ball is no better than anybody else’s and this is just speculation. But it is not purely a mental exercise, because the odds are that somebody is going to be the cable killer.
One can first look at the characteristics that any cable killer must have. Number one is that they are going to need to have access to large number of potential customers. Today there are only a handful of companies that can make such a claim, although we have seen that when something new comes along that a new industry entrant can attract millions of customers in a very short period of time. The cable industry has a handful of large providers including Comcast with 23 million, Time Warner with 12 million, Direct TV with 20 million and Dish Networks with 14 million. And Charter would join this group if they are able to buy Time Warner.
So who can compete with those kinds of numbers? I can think of several that already have more customers than Comcast. Netflix is one, with over 33 million subscribers. It is not much of a stretch to see NetFlix as a cable killer if they can get enough additional programming to lure people permanently away from cable.
Interestingly, the company that has quietly built a huge pile of potential customers is Apple. They have sold over 20 million Apple TVs. And worldwide they have sold over 170 million iPads, many of them in the US. It’s been rumored for years that Apple was on the verge of announcing a programming blockbuster, and perhaps they have just been waiting to get enough Apple hardware platforms into the marketplace before trying to lure the programmers. This company destroyed the music industry in just a few years and perhaps they can do it again with cable.
And we can’t forget Google. Google has been rumored to be thinking about bidding on the NFL Sunday Package when it comes up for renewal. One thing that Google has that nobody else has is the ability to throw billions at launching a new effort in a hurry. Sports programming is one thing that could lure people off of traditional cable and it is not too hard to imagine Google outbidding everybody else for the NFL and a few other sports networks and then also swinging a deal with ESPN.
There is also the upstart Aereo. Assuming the courts don’t stop them, they will be in every medium and large tier market within a few years and building up a big customer base that is already spending money for alternate programming. While they are only streaming a limited line-up today, they already have the technology in place to support a huge line-up through the air.
It seems to me like it is going to be very hard for programmers to keep ignoring some of these companies. Now that traditional cable is losing customers every quarter it is going to become easier and easier for programmers to do the math and to see that they could get revenues from both the traditional cable operators and the new upstarts. There is no love lost between the programmers and the cable companies and the programmers will make new deals when the math looks right.
If I had to pick a winner from that pile of candidates it would be either Google or Apple. Google is capable of buying the sports market and luring away the many sports fans. Apple could begin offering alternate programming in a hurry through its huge embedded hardware base. And perhaps, the real answer is – all of the above. Once a few programmers decide to break the traditional monopoly they are likely to make a deal with anybody who will give them money for their content. If that happens, the traditional cable companies are toast in terms of keeping any cable monopoly. But they will always be relevant as the largest ISPs in the country.