Consumer · Consumers

Why have cable companies been so slow to respond to disruptors?

Kashif Jehangir Assistant Manager Administration at Private Company

Last updated on May 4th, 2017

Who likes paying for cable? Pretty much no one. It’s expensive and you get a bunch of things you don’t want. This situation makes it completely ripe for disruption, the type consumers love. Break up an antiquated industry that’s expensive and unfriendly for consumers, a la hotels and taxi cabs. But the speed at which the cable industry is being disrupted is just. So. Dang. Slow. Sure, Sling TV and Sony have been offering slimmer bundles for years (and Hulu and DirectTV have just begun offering theirs), but these packages are still fairly expensive. And why haven’t cable companies made a drastic change before they lost more customers? What does the future of cable look like in five years?

Tim Boudreau Consulting Product Manager / Software Engineer at Oracle Labs

May 4th, 2017

It entirely depends where you live, whether you have alternatives. For example, where I am, there is exactly one broadband provider and that is also the cable provider - and they make it cheaper to buy internet+TV+landline than any one individually.

Also, we moved my father in with us, who is 89 years old. I am NEVER going to get him to understand how to use our Apple TV (or, for that matter, a mobile phone) to find what he wants to watch, but he understands cable and channels perfectly well. Don't underestimate the size of the population that has no stomach for the unfamiliar, and is perfectly happy to keep paying for something that works fine for them.

In a lot of the US, cable companies have a monopoly on the infrastructure of getting broadband internet at home. That allows them to use that monopoly to support their legacy business. And as you mention, all of the new entrants into the market are fairly expensive.

You're making the assumption that cable companies are losing customers. If a TV customer turns into a broadband customer, they are not. Are you sure your assumption is correct, and that it is correct for most of the market cable companies serve, not just major metro areas?

Joanan Hernandez CEO & Founder at Mollejuo

May 4th, 2017

Cable companies DO want to change their model, however content providers DON'T.

Content providers contracts from companies such as VIACOM, Disney, TimeWarner, Discovery, etc. explicit prohibits breaking their content in individual channels. They say to any cable company: You want to distribute our content? You must sell it in package, no individual channel option available. If they do, they lose the contract.

DirecTV tried to break that some years ago, they lost that battle.

From the content provider point of view, big channels subsidize the content of their smallest ones (audience wise). If that breaks up takes place, many channels will disappear. Not good, in their point of view.

Therefor, they only way to disrupt this game is to produce your own content, which is exactly what Amazon and Netflix are doing. This in the end will erode the leverage that the original content providers had. However, from current content providers point of view, they have to defend their current business model.

A lot of money is at stakes, nobody is going to give an inch towards the other side.