Posted 02 December 2013 - 08:08 AM
While the networks and content providers are making lots of money with the current model, the cost to the consumer is reaching a point where the current model will soon be unsustainable. The reason so many young people are choosing to live without a multi-channel service is that it is too expensive for the amount of use they get from it. With options like Hulu, Netflix and, increasingly, video games, young people are getting their entertainment elsewhere.
With a gradually shrinking pool of cable and satellite subscribers the content providers are going to find it increasingly difficult to preserve their current revenue stream, never mind growing it. I picked $50 per month as the sweet spot for monthly cost. Less than that, and the offering will be fractured and incomplete, like the services offered today. More than that, and you are back in the situation of pricing yourself out of the market.
The lack of bandwidth is a spurious problem. As internet demand has grown, the capacity as grown with it. If a streaming service starts to overload the internet, the capacity will be increased. It has happened constantly ever since the internet got started over 20 years ago with dial up and SLIP connections. Sure, it will be a while before sufficient bandwidth is available in rural areas, but it will happen...and probably a lot sooner than anyone thinks. A streaming service can do quite well even if their market is restricted to users with 5 megabit download speeds or more.
I used to be on the other side of this debate, but I have become convinced that sooner or later somebody will put together a service that really makes cord cutting viable. It is inevitable. Just as a musician or an author can reach the public directly via on-line publication, eventually video producers will realize that they can make as much money, and have greater control, by taking their productions directly to the public. It is already happening on a very small scale. It won't happen tomorrow, but in the long run the system we know today, with multi-channel service operators controlling distribution, and broadcast channels controlling what gets produced and offered, will collapse - just like the big record company model and the big publishing house model have collapsed before it.
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