The Cable Industry has what could be characterized as a Machiavellian hold on consumers with its massive distribution system using opportunistic methods on outdated hardware. Yes, the technology being used, the notorious set-top-box (STB) can only be described as throw-back to what cable executives wish were the way things used to be. The STB is rudimentary at best, allowing limited functionality and connectedness with today’s emerging technological innovations.
Consumers Want Functionality
The underlying reason for Cable’s hold on a massive portion of consumers is the relatively ease of use, albeit limited functionality of its set-top-box. Consumers can easily channel surf and find their most enduring programs, but that is about it. Not only are consumers paying a premium via monthly fees for limited box functions, extra boxes are fee driven as well. Adding digital and HD access drives up the box price. In summary, the STB continues to be a throw-back to the early days of a now mature Cable Industry.
Ease of use in functionality, programming access, IP connectivity, streaming, cloud storage, and social network access are emerging keys to success today’s consumer market and Cable Industry competitors have failed miserably in offering functionality in those consumer demands to date. Just head over to the CES (Consumer Electronics Show) and revel over the new Smart TV’s emerging via Samsung, LG, Sony and Panasonic, with IP based connectivity, App access, OLED technology, and UHD (Ultra High Definition) capabilities. Hardware keeps driving the business, yet functionality remains underperforming.
Disruptive Competition Not Meeting the Need
Competitors like Google TV, Apple TV, Netflix and others have emerged to challenge the industry which now includes the TV manufacturers as well. These ventures have had little success in dislodging the stranglehold of Cable and Programmer relationships. Since this relationship has been opportunistic in control over mainstream programming access, competitors can’t seem to muster the program rights or consumer functionality required to make market in-roads. Programmers hold cable companies hostage over multiple channel demands in carriage fees, while ignoring upstart competition in the industry. See (Sony May Want to Launch an Internet TV Service)
Until IP based competitors of the cable industry realize that functionality is a basic component of consumer needs, market dynamics will not change, at least in the near future. The average viewer needs a simple interface for accessing and controlling their programs. That interface must come with a wide range of programming choices, access to social networks, applications that enhance various connected portals, all on two devices, the TV and remote control. The traditional set-top-box should not be part of that equation. Yet the Cable Industry moves to improve consumer access to multiple connected devices albeit with a hefty cable video package in tow. See (What Do “Cable Nevers” Mean for TV’s Future?)
Until consumer program distribution metrics are changed a bottleneck will exist for competitiveness in the Cable Industry. If programmers realized their current distribution method is outdated and unrealistic in its fundamental assumptions, that an IP based distribution using cloud technology method holds enormous potential in consumer access and purchasing power, the game would change immediately. Broadband, Mobile and Wireless connections are becoming accessible to most of the masses and that correlates to a US and worldwide distribution method. Yet, programmers hold on to an archaic model of distribution, immersed in collusion with a mature dying market. To break the Machiavellian model of Cable Industry-Programmer as a consumer only alternative, ease of use functionality must be intrinsically tied to any disruptive technology, or it will not survive.
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