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Change of Heart by Cable?

April 22, 2010 | Author: Ibex Marketing

Jim O’Neill is the editor of Fierce Online Video, and he made an interesting observation in his column today :

At the American Cable Association’s policy summit this week in Washington, several smaller cablecos posited that acting as a “dumb pipe” for the flood of online video that was moving across the system of late might actually be a better business model than the current pay TV model they’ve rallied around for the past three decades. After all, if you charge customers or program owners for delivering the content–and you don’t have to worry about DRM (that becomes someone else’s headache)–your job, and profit margins might actually be safe.

That seems to make a lot of sense to me, too. Why worry about whose content it is and how much it costs and how to pay for it? Just be a service; you provide a high quality, reliable pipe that can pour buckets of data into the home. You don’t have to worry about about what the content is; you can just meter the usage and collect your fee. The business model is a whole lot more like being a phone company than a TV station, and should be a lot simpler and sustainable.

All the same, I’d be surprised if any of the large cable companies start acting this way. They’ve invested millions — if not billions — in creating an identity where the entertainment content is the key to their service, and it’s going to be hard to turn that ship on a dime. If some of the smaller cable companies can show that it’s a viable strategy, however, we could see a totally different service and content delivery landscape 10 years from now.