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How Do You Adapt to a Rapidly Changing Industry: The Cable TV Story

September 21, 2021
By James Gussie

In the early 20th century, cable television was a new idea that had been developed by radio pioneer Lee De Forest. The first cable television company, American Telephone and Telegraph Co., was founded in 1920.

The cable tv is a story of how the industry has changed rapidly and how to adapt. It discusses how the cable TV market has been changing since the early 2000s, with companies like Netflix and Hulu leading the way in streaming.

What is the best approach to prepare properly for an uncertain business future when an industry is in chaos, with numerous disruptions striking it from all sides?

That is exactly what is occurring right now in the cable and broadcast television businesses. For many years, the broadcasting paradigm was dominated by advertisers. Advertisers pay the networks to have their messages aired to a significant number of television homes. Cable programmers utilized a subscription model in the cable business, paying high money for excellent content.

However, Internet connection in homes, Smart TVs, and an ever-expanding variety of watching choices for consumers are turning the business upside down. Long-established cable television behemoths are seeing their market share eroded by ultra-cheap streaming video and television providers.

For years, cable television providers have known this, but today it can be stated with certainty that streaming television services represent a significant danger to the business. According to Business Insider, the pay television sector lost 80,000 customers between May 2012 and May 2013, the first time the industry has seen such drastic losses.

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This raises two issues in terms of company planning:

What can cable television providers do right now to stay competitive?
What changes will the cable industry make to its business plans to accommodate a new future?

Because technology accelerates change, rethinking company strategies and responding to market pressures is more challenging than ever before.

Cable TV is under threat.

Cable television is under attack from a variety of directions. The cable television business has put itself in jeopardy. The big players haven’t had to innovate in decades since their profit margins have been so high. Why mess with something that works so well?

Second, for decades, cable television corporations have benefited from bundling, which involves concealing the channels that customers actually want inside a bigger total bundle. This has enabled businesses like Direct TV to charge higher rates, but now that streaming media is gaining popularity among users, customers have a more cost-effective option.

Cable television providers are likewise extremely protective of their turf. According to the New York Times, cable firms such as Time Warner and others are attempting to stymie Intel’s attempts to create a rival Internet-based cable service that would offer customers a bundle of TV channels via the Internet. Cable providers are concerned that this so-called Intel TV, which is provided through broadband Internet in households, would have a significant impact on the US television industry.

What can cable television providers do in the face of these threats?

Or will you perish if you don’t adapt your company plans?

Streaming media is very popular among consumers. Netflix recently claimed that its subscribers watched 4 billion hours of streaming content in the first quarter of 2013, more than any other cable television network combined. That puts a lot of pressure on cable TV providers to provide a product that keeps up with evolving customer expectations.

The good news for cable providers is that this transformation will take time. According to Craig Moffet (in this CNBC article), by 2020, the percentage of Americans ready to pay for television will decrease from almost 90% to about 80%. That’s seven years away, so cable providers should have plenty of time to devise a strategy to escape obsolescence.

Taking proactive measures

To their credit, cable TV providers are finding methods to provide better value for money spent with them—one here’s example:

Cox Communications, for example, offers a more user-friendly interface, a more powerful DVR, customized suggestions, and multi-device access. These were some of the top requests of end customers, according to market research conducted by the business.
Comcast has introduced a new user interface that is more intelligent, customized, and simple to use.
Web firms like Twitter are courting cable providers in part to form new partnerships between social media and cable services. This may pave the way for a more solid new business strategy.

obliterate existing business models?

Cable providers may have to deconstruct their existing business structures and start from the ground up in the future. Here are a few possibilities, all of which are very speculative:

If you can’t defeat ’em, become one of ’em: Cable companies now have significant profit margins, and they might invest millions in developing their own streaming services. Hulu, the streaming service, has been on the market for a long, and it’s been speculated that a cable TV provider could buy it.

Developing exclusive rights to popular programs: Similar to Netflix’s debut of “House of Cards” earlier this year, cable television providers may profit from maintaining exclusive rights to television shows on their own streaming networks. Successful miniseries, such as the History Channel’s “Vikings” and “The Bible,” which aired earlier this year, are another option.

Buying the rights to major live sports programs, the NCAA basketball championship, the Super Bowl, and other exclusive live events may help cable TV providers better position their businesses.

The fittest survive.

It’s never easy to alter the current power structure, but change is coming to the cable television business, whether you like it or not. It’s past time for them to consider a new business strategy to maintain their businesses competitive in the ever-changing world of content consumption. Adaptive and innovative businesses will be the leaders of future.