The Jeff Pulver Blog: Internet TV may pose threat to Cable Companies by Decade's End.

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May 02, 2007

Internet TV may pose threat to Cable Companies by Decade's End.

The Cable Version of “Wireless Conversion” is going to happen.

As a reminder, for the past seven years, billions of dollars of fixed-line revenue has been lost by phone companies around the world as their customers have given up using fixed telephone lines in favor of purchasing their primary phone service from wireless carriers. This trend is known as “Wireless Conversion” and this is revenue which will most likely never be replaced by the phone companies.

In the near future, I expect cable companies may start to suffer a similar parallel fate as the wireline phone companies. This eventually will mean billions of dollars of revenue loss without any notion of being able to replace the lost revenue. And I expect we will start to see this trend happen first in the 16-24 year old demographic.

How does this happen? It happens because there is a portion of the existing 16-24 generation which does not watch traditional broadcast TV and they are not watching Cable TV. What they are watching is TV content on the internet. And when these kids leave home and go off to college, they are not signing up for cable TV service in their dorm rooms. Instead they are continuing to watch their favorite TV shows thanks to BitTorrent or are going online to the network websites to catch up with a missed show or in some cases they are also going to iTunes and purchasing the shows to watch on their video iPods and computers.

So it shouldn’t be hard for any of us to fast forward to the time where there are plenty of consumer electronic devices which seamlessly take Internet TV content and deliver the content to the televisions in our living rooms. While the current version of Apple TV isn’t there yet, there are quite a number of devices that I have recently seen that do get us there. MythTV continues to be interesting too. While this model does assume basic broadband connectivity in the home, it does not assume basic cable service. And in the near future when more content owners like MLB.TV decide to go direct to the consumer and bypass traditional distribution channels, what we end up with is ”Television Disrupted.”

I also believe that in the next 3 years (maybe sooner), some of the major movie studios will start to look to offer viewing access to their first-run movies directly on the internet. This is already happening with Indie Films and it is just a matter of time for this to transcend to the major studio releases.

Add in the millions of “unisodes” already available for viewing on the internet and combine this with the long-tail Internet TV shows that are available for viewing on sites like Network2 and more people will start to take notice. And when the major TV studios implement their own Internet TV strategies and decide to also go direct to consumer and bypass many of the costs associated with traditional content distribution, things like basic cable service become a commodity that an entire generation of people may decide they just don’t need.

At the current rate of innovation and change, I except more and more people will start to watch Internet TV in their living rooms. This in turn may start to pose a real threat to Cable Companies by end of this decade.

The Cable Version of “Wireless Conversion” is going to happen. We just need a name for it.

Tags: Internet TV, Apple TV, MLB.TV, Cable TV, Jeff Pulver

Posted by jeff on May 2, 2007 06:56 AM | Permalink

Additional resources: #140conf events | Watch the Jeff Pulver Show | Jeff's Qik Videos

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Posted by: myJose.TV at March 6, 2008 08:50 AM

I can see that happening. It seems more convenient and economical than cable tv.

Posted by: Good buy cable at July 9, 2007 01:24 AM

Broadband and lower priced computers the key. Regardless of the recent negative stats for the US, 60% of US homes have DSL or Cable Internet for a reasonable price. In the home, each family member has their own media device and it is not a TV. The real litmus test is that my teenage son (14) and his friends live on the computer - MySpace, Facebook, Trillon, YouTube, music sites and recently Stickam. They do not watch television/cable (zero). The future is today for a certain age group that is viewing media only if the media is on the Internet.

Posted by: Barlow Keener at May 3, 2007 10:13 AM

Is there proof? The proof happens when we look back in 3-5 years and see how this trend evolved.

Posted by: Jeff Pulver at May 3, 2007 07:44 AM

Jeff

very interesting - what proof do you have of this trend - is there any out there - I agree totally with you and and am writing a biz model in preparation fo this emerging market

do you think it will happen that quick - why?

Posted by: Gary Patterson at May 3, 2007 06:16 AM

Isn't wireless phone service mostly delivered by the old fixed-line phone companies? And won't IP service likely be increasingly delivered by Cable TV companies? I like IPTV and at 63 years of age, I've shifting completely to internet delivered audio and more and more to video over IP. I like the increased choices and the more direct interaction possibilities. Although, it is a different business, is it not going to be the same companies providing it?

Posted by: p0ps at May 2, 2007 12:46 PM

That's what I like about this industry. complete sectors are going to loose ground and they don't see it coming.
check out my response -
http://pravdam.wordpress.com/2007/05/02/cables-companies-beware/

Posted by: Kfir Pravda at May 2, 2007 10:44 AM

The same phenomenon is happening in advertising. In Williamsburg, Brooklyn, my partners and I are moving toward putting advertising into the hands of the consumers. It will take time, education and patience, but we believe it will work splendidly.

Posted by: Jan / The Faux Press at May 2, 2007 08:52 AM

This is what we all hope isn't it? BUT with the phone companies getting into the cable TV game (with their new IPTV offerings), and them lobbying *against* net neutrality, do you really think that if they get net neutrality dropped that they'll allow anything to compete with them, you know, just on a practical basis? I mean basically what the Telcos are doing is rolling out new fiber 70% of the capacity of which will be used up with their new IPTV (cable TV) services so do you think the'll allow anyone to compete with them on the other 30% of "their pipes" er "tubes" with no net neutrality rules in place? Ok that was redundant but it bears repeating.

I agree with you here, this COULD happen. I've been hoping for it. But I'm also worried that it won't happen if the rules change.

Posted by: Bill Streeter at May 2, 2007 08:40 AM

Michael - another case for someone to be a "dumb pipe" provider.

Posted by: Jeff Pulver at May 2, 2007 08:28 AM

Seems to me that the only winner might be whoever is the supplier of broadband to the home.

Posted by: Michael Bailey at May 2, 2007 08:26 AM

May 02, 2007

Internet TV may pose threat to Cable Companies by Decade's End.

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