Cable Company Consolidation Lays Ground for the Evolution of Entertainmenton February 13, 2014 at 7:41 pm
Comcast’s purchase of Time Warner Cable was agreed today, subject to regulatory approval, and the stage is now set for another round of evolution in the entertainment industry.
The combined company would serve more than 30 million cable customers across many key U.S. markets, some 10 million more than its nearest rival DirecTV.
While the size and scope of this new entity does prompt concern over consumer choice and quality of service, those fears may prove short-lived. Why? Because cord-cutting is inevitable and cable companies have been living on borrowed time when it comes to the mass bundles of television channels and other services that form the core of their business. The increased connectivity and variety of mobile devices available to consumers are driving innovation and new choices in the entertainment industry, as demonstrated by the MPAA’s ‘Where to Watch’ initiative last year.
The thread is already being pulled vigorously by the likes of Netflix, Amazon, Apple and Google/YouTube, and the tech sector is only years from completely unraveling the established business model of the last 30 years. Numerous smaller entertainment-based start-ups are also nipping at the heels of traditional broadcasters, competing for that all-important viewer attention. Put simply, the level of competition coming from online channels and video on-demand services offers too much potential loss for even the largest established cable company to ignore.
For their part the cable companies do seem to be acknowledging the need for more nimble, flexible products and services. On-demand viewing apps are being created for tablet and smartphone viewers, partnerships with content providers and individual channels are evolving to offer consumers more choice, and there seems to be a general acceptance that high-priced, mass channel packages won’t satisfy the next generation of customers. Even so, the cable company consolidation creates a powerful, dominant organization when it comes time to negotiate content prices, giving the proposed new entity greater control as to how quickly the existing model transitions to the next.
More than cable television services, the biggest concern for consumers should be a lack of choice in who provides our Internet connection. Even with hundreds of other entertainment options available online, we still have to pay for the digital pipes through which the shows flow. The overlap of the cable companies also being the Internet Service Provider for many is a potential worry, as a factor that could reinforce the prevailing bundle mentality. Even with an alternative connection through a cellular provider the service is not fully comparable, as 4G speed and availability vary greatly across the country. Data plans must also be factored into mobile costs, making a hard-wired connection a “must have” for the foreseeable future.
The wider context of this acquisition sees dominant but challenged traditional media companies with vast experience needing to reinvent themselves for the digital marketplace. Should it be approved, the shake-up that this deal will bring is the perfect opportunity for the new company to evolve its services for the next generation of viewers.