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Articles in this Blog Post:

“Pay TV industry loses record number of subscribers”

“A Bleak Picture for TV Makers”

Question: How has the competitive landscape changed as a result of leading entrepreneurs in the industry?

Article Summary: Recently, distributors of cable and satellite have been facing a new problem – more and more people are canceling their television subscriptions. While this decrease in customers was small last year, the numbers now are growing, causing a change in competitive landscape. The Associated Press reported that in the course of three months, April to June, distributors lost almost 200,000 subscribers, a 0.2% loss from the total.

Where are all the subscribers going? Due to the poor economy, evidence shows that many consumers have shifted to leading entrepreneurs that offer Internet distribution services at a cheaper price. Netflix and Hulu have many of the same popular shows that the rest of the distributors have, but with no installation, fewer advertisements, and more portability with the growing use of laptops. In an effort to make more of a profit, the content providers like Newscorp demanding higher fees to the online subscribers and instating a week delay on shows for those who use Hulu but do not pay for the expanded Hulu Plus features.

In addition, the markers of physical television systems have suffered a great hit, and companies are manufacturing TVs with Internet connectivity to combat the losses. Sharp Corp. will introduce a new model with “4K” technology, which is four times more detailed than standard HD, which will presumably bring more change to the industry as providers take advantage of the new technology. Bottom-line: entrepreneurs in the form of online streaming are bringing a hit to the rest of the media industry, which makes other distributors struggle, leads content providers to demand higher fees, and physical television producers to introduce new changes of their own.

My Analysis: There’s no doubt that online streaming has influenced changes in the media industry. While the first article mentions how some big companies are not yet acknowledging the threat of online streaming, a product that costs only about $8 instead of the more expensive cable and satellite is incredibly attractive, especially with the recent recession taking most people’s wages.

The entrepreneurs have changed the stage to bring changes in physical televisions, which have much potential to bring even more innovation. Obviously, with internet-connected televisions, more user interactivity and control is brought to the action of watching TV. The 4K televisions, which are four times more powerful than standard HD ones, will also probably spark more competition in the industry – cable and satellite companies are still competing over which has the most and best HD channels.

But the powers of these new entrepreneurs should not be over-exaggerated. In the United States there are about 83 million subscribers to television producers, so a loss of 200 thousand is hardly crippling. Additionally, with Netflix currently in a period of decline and the runner-up Hulu being significantly smaller, the entrepreneurs are still going to need much more innovation to stand amongst the giants without getting squashed.