Television disintermediation

Driving home from work (a Saturday class), I happened to flip to a Sacramento radio station that was running a syndicated computer radio show by Kim Komando. It’s not sexist to say that — although I didn’t know this while driving — Kim is far prettier than her major rivals (Leo Laporte and Larry Magid). What caught my attention on first listen was that she struck the right balance of knowledgeability without either being obvious or condescending. I’ll certainly look for it next time I’m driving alone on a Saturday between 12-3.

Kim pointed out an article that I had yet to read from Friday’s Wall Street Journal, which spells out how the Internet is increasingly a flexible and cost-effective substitute to cable TV:

Turn On, Tune Out, Click Here
TV Viewers Cut Cable's Cord; Here's What They're Watching Online Instead
by Nick Wingfield

Kim was right to identify the importance of this article identifying an important trend for television distribution. Nowadays, most broadcast TV episodes and an increasing proportion on cable TV shows are available online via iTunes, Hulu, YouTube or the network’s website, as with the recent Sarah Palin satire on Saturday Night Live.

Cable was the ultimate IT monopoly — either you paid your local provider, or had to settle for broadcast. Then VSATs made possible DirecTV and Dish Network, so that cable had some viable substitutes. Today the two surviving Baby Bells, Verizon and SBC, are offering fiber-to-the-home based competitors under the FiOS and U-verse brands.

The Internet offers the prospect of disintermediating these pipes for distributing this television content to the home. (Let’s leave aside for now the minor problem that except for WiMax, all those Internet connections are provided by these same companies).

While some of these solutions are obviously inferior in terms of resolution and other performance metrics, the rise of the Internet as an alternative has arrived much quicker than I would have anticipated even 18 months ago when one of my students was proposing to make a video download box. There’s been an obvious boost from AppleTV, the Netflix Player (from Roku), and the various Slingbox and SlingCatcher products.

When I first used Amazon.com more than a decade ago, I underestimated how quickly it was going to change both my personal habits and retailing in general, including contributing to the death of America’s greatest record chain. Given that, I think Cox, Time Warner and especially Comcast have a grim future. Unlike The Phone Companies, they have few options for diversification and vertical integration, even if they are doing their darnedest to surpass TPCs’ (admittedly low bar for) customer service and customer satisfaction.