Dear Comcast (and other providers): it’s time to change your model. Creative destruction is the way Cable companies can become more than a mere pipe to the Internet. Wikipedia defines this term, first coined by philosopher Joseph Schumpeter, by stating: “innovative entry by entrepreneurs was the force that sustained long-term economic growth, even as it destroyed the value of established companies and laborers that enjoyed some degree of monopoly power derived from previous technological, organizational, regulatory, and economic paradigms.” Cable must change by offering a la carte programming to subscribers whereever and whenever they are, or Netflix, Hulu, Apple, or Amazon may leapfrog it by being able to offer the customer choice and convenience.
Having just re-enabled my Netflix subscription after a few years away, I think that the only place Cable companies can compete successfully is in the realm of sports. Movies, TV shows, and other events have already time-shifted (and paradigm-shifted) to being available on partner web sites or individually available through services like iTunes. So how can Cable compete? Imagine a world where MLB.tv, NFL Gamepass (not available in the US), and ESPN3 are available for a bundled price along with an Cable Internet package. Comcast has already stuck a toe in the water here by offering ESPN3 to its subscribers through Single Sign-on (SSO).
The genius of Netflix is that the company uses Single Sign-on (in a very simple way) and builds intelligence into its clients so that the experience is optimized for the platform you choose to use. Stream content on an iPhone, through a Wii, or through your computer, and the result is not quite perfect, but it’s most of the way there. As compression algorithms improve, broadband speeds increase, and computer processor speeds grow, Netflix wins. It’s much easier to use than other methods like BitTorrent (you know all of your content is legal) or iTunes (you don’t have to download the content and it’s a familiar “all-you-can-eat” model.
Cable companies will complain that the quality of service is lousy, that the public won’t like the potential technical challenges, and that the rights management and fees don’t add up to positive economic gain. Yet events like this year’s World Cup broadcast over Univision and ESPN3 garnered millions of viewers around the world who were clearly engaged enough, technically savvy, and football-crazy to watch whereever they were. And if Comcast is losing a customer like me (I am a technically savvy, lucrative customer, who left because I couldn’t make their Video On Demand (VOD) service work the way I needed it too for my family), it’s not a good sign.
Now’s the time to open up the door to other live channels, yet simply change the transport mechanism so that we can watch the channels we want, at the time we want, and on the devices we want, without having to add the overhead of all of the silly channels no one watches. Make Cable an actual free market experiment and let the pricing on events float (within a range), offering high-quality replays for less money, and I’m sure that most people will end up spending far more per month than they did under the old, monolithic, “bundling” model. I’m still using a set-top box: it’s just that now that box is a Wii or a Blu-Ray player, running Netflix.