“Cable television subscriptions will experience noticeable percentage declines in the next three to five years.”

Last week it was announced that for the first time in history paid television subscriptions dropped 216,000 with cable taking the greatest hit.

The conventional wisdom of course is that this is due to the bad economic conditions of today.  Of course that is a factor, but the times have been bad for the past two years.  The new dynamic is what I touched upon in last year’s column; that the video viewing marketplace is fundamentally changing, that disintermediation is entering the living room with televisions with internet connectivity and that people have become increasingly comfortable with alternative screens.  In addition, people have come to accept paying for what they watch.  The cable television model is based upon having people pay for all the channels they don’t watch.  Why would people who willingly pay for what they watch any longer except paying for channels they don’t watch?

Of course, a decline of 216,000 subscribers is nowhere near a “noticeable percentage decline”, but I believe that this first ever downturn will be looked back upon as the early indicator of the trend I forecast last year.  As for the rest of that forecast from last years’ column:

“This decline will only be slowed if they [cable operators] accept unbundling and price per channel. This will cause a variety ...]]> Last November, I wrote a column here about the future of cable television.  In that column from last November I forecast:

“Cable television subscriptions will experience noticeable percentage declines in the next three to five years.”

Last week it was announced that for the first time in history paid television subscriptions dropped 216,000 with cable taking the greatest hit.

The conventional wisdom of course is that this is due to the bad economic conditions of today.  Of course that is a factor, but the times have been bad for the past two years.  The new dynamic is what I touched upon in last year’s column; that the video viewing marketplace is fundamentally changing, that disintermediation is entering the living room with televisions with internet connectivity and that people have become increasingly comfortable with alternative screens.  In addition, people have come to accept paying for what they watch.  The cable television model is based upon having people pay for all the channels they don’t watch.  Why would people who willingly pay for what they watch any longer except paying for channels they don’t watch?

Of course, a decline of 216,000 subscribers is nowhere near a “noticeable percentage decline”, but I believe that this first ever downturn will be looked back upon as the early indicator of the trend I forecast last year.  As for the rest of that forecast from last years’ column:

“This decline will only be slowed if they [cable operators] accept unbundling and price per channel. This will cause a variety of cascading problems for all those reliant upon cable television distribution.”

This part of the forecast will take a few years to become fully realized.

In conclusion, there might be an occasional uptick in cable television subscriptions ahead, but the long term trend of declining subscriptions has just begun.

We have all lived through a lifetime of technology changing the media and content landscape.  Satellites allowed cable television and later satellite television to erode and then eviscerate the traditional broadcast network business model.  Then the analog to digital transition eliminated the physicality of the product in the music industry.  Then the universal, immediate and free availability of news and information on the Internet has pushed news magazines and newspapers to the edge of the abyss.

It is now cable television’s turn to face the disintermediating power of the Internet and technology.  This is a trend I have forecast for the past two years.

Cable television has long had a strangle hold on the American household as it has been the “last 30 feet” of connectivity into the home.  Owning this connection has allowed cable television MSOs and operators to control a great deal of the media access to the home and, in many cases such as customer service and pricing, act as a monopoly.  First was the connectivity to the world of cable television.  This was followed by ...]]>

We have all lived through a lifetime of technology changing the media and content landscape.  Satellites allowed cable television and later satellite television to erode and then eviscerate the traditional broadcast network business model.  Then the analog to digital transition eliminated the physicality of the product in the music industry.  Then the universal, immediate and free availability of news and information on the Internet has pushed news magazines and newspapers to the edge of the abyss.

It is now cable television’s turn to face the disintermediating power of the Internet and technology.  This is a trend I have forecast for the past two years.

Cable television has long had a strangle hold on the American household as it has been the “last 30 feet” of connectivity into the home.  Owning this connection has allowed cable television MSOs and operators to control a great deal of the media access to the home and, in many cases such as customer service and pricing, act as a monopoly.  First was the connectivity to the world of cable television.  This was followed by high speed internet connections and then land line phones.  This created the “triple play” of cable.

Two of these three are now going to decline. There are more cellular only homes than land line only homes and the number of land line homes is decreasing.  The big news is that the cable television connection is now not only threatened but will start to decline in total numbers.  The one, vital and secure business is the high speed Internet connection.

This first became apparent to me last August.  My son, having just returned to his off campus apartment for his senior year of college called me up one evening to say that he had just saved me $60 a month.  After thanking him I asked how.  He said that when the cable company came to connect his cable television and high speed internet connection he had them just connect the latter.  He said that it was his senior year, that he would be writing a lot of papers and would be doing a lot of reading.  He went on to say that when he had the TV on, it was usually for games or DVDs.  He decided that any TV shows he wanted to watch he could do so on his laptop via the Internet – and on demand when he wanted to watch. [In addition, being in his early twenties, he only had need for his cell phone]  Look to the young to see the future.

This got me to do some research.  I found that one percent of households used high speed internet connections to watch TV programming only on computer.  As most TV networks cable and broadcast, upload their content to web sites, this is not difficult to do.  Granted, six months ago it was only one percent, but at some point in time cable had a one percent penetration, one percent of people who listen to music downloaded it from the Internet and one percent of the population had cell phones.  Add on to this the fact that since last fall, practically every household is making dramatic cuts in spending and the direction is clear.

In addition to this trend, there are going to be some technological breakthroughs that will disintermediate the living room.  What I mean by this is that in 2009 and 2010, companies will introduce technologies that will make connecting the Internet to the big flat screen TV in the living room a very easy thing to do.  When the entire video inventory of the Internet is available on the TV screen and there is easy navigation via remote control, many households will simply not subscribe to the traditional cable TV service and the expensive hardware that comes with it.  Everything will be available on demand, including movies and all content that the viewer wants to save can be stored on a hard drive.

Cable TV companies will be the first to feel this pain as their primary revenue stream will shrink.  Raising prices will only accelerate the trend, so that will not be a long term option.  The cable networks will suffer revenue decline as subscription revenue falls.  This will ultimately be replaced to a degree when the coming technologies will allow highly targeted, interactive advertising with resultant higher CPMs  for  viewing on-line – now on big flat screen TVs –  to be better monetized than it is currently.

When viewed from the highest level, this is just a continuation of the devaluation of distribution channels.  People view content and do not particularly care how they receive it as long as it is of good quality and available on demand when they want it.

2009 will be the year that the cable TV bill will begin to be viewed as a discretionary rather than a necessary expenditure.

This has been something that has interested me for years and a subject about which I have written here and here in this blog.  As recently as five years ago, the topic of convergence was a speculative, hot one in media and technology circles.  The convergence discussed then was would there be convergence of the computer and the television?  Would people ever fully accept viewing television content on the computer?   Well we now have the answer to that loud and clear:  yes! Even Steven Jobs doubted this would happen.  He famously said that the profound difference between computers and televisions was that people leaned forward when interacting with computers and leaned back when watching television and that therefore this content convergence would not happen.  Well it did.

Now this convergence is combining with wireless connectivity to begin to change the connection of technology in the home.  The long predicted vision of technologists and futurists of the home of the future where everything is connected and can be monitored and controlled is now beginning.

Sony introduced plug-in adapters to allow some of its Bravia television sets to connect wirelessly to the ...]]> Last week the Internationale Funkausstellung was held in Berlin.  This is the largest consumer electronics convention in Europe, equaling and perhaps surpassing the CES show that occurs every January in Las Vegas.  One of the central themes behind major new product launches was the Internet and the central role it is now beginning to play in the wirelessly networked home.

This has been something that has interested me for years and a subject about which I have written here and here in this blog.  As recently as five years ago, the topic of convergence was a speculative, hot one in media and technology circles.  The convergence discussed then was would there be convergence of the computer and the television?  Would people ever fully accept viewing television content on the computer?   Well we now have the answer to that loud and clear:  yes! Even Steven Jobs doubted this would happen.  He famously said that the profound difference between computers and televisions was that people leaned forward when interacting with computers and leaned back when watching television and that therefore this content convergence would not happen.  Well it did.

Now this convergence is combining with wireless connectivity to begin to change the connection of technology in the home.  The long predicted vision of technologists and futurists of the home of the future where everything is connected and can be monitored and controlled is now beginning.

Sony introduced plug-in adapters to allow some of its Bravia television sets to connect wirelessly to the Internet.  Phillips introduced stereo systems that wirelessly tap into music stored on computers or laptops in the home and stream that music through out the home. Most of the flat panel TV manufacturers introduced models that connect to the Internet both with and without wires.

To those of us that keep abreast of technology and media, all this doesn’t seem too radical, just a logical next step.  We are in the early adoption phase of this new trend.  It is interesting to point out that it is our media orientation that is starting this development.  Our need, desire and sense of convenient right, to watch whatever we want, from whatever source we choose, is what is driving this early wireless connectivity within the home.  Internet video, television channels and stored digital music files can all now be wirelessly available in all parts of the home.

This will have seismic affect on the viewing of content.  Right now the television channels have the benefit of exclusivity in the living room.  We have all grown up watching television programs on the ever bigger screen in the living room.  Anything on the Internet must be watched on a computer screen.  Once there are more than 20% of households that have televisions sets connected with the Internet viewing patterns, and therefore audience ratings, will change.  The ever lower audiences of broadcast networks, and, to a lesser degree, cable networks, will fall even further.  Just think of being able to turn on your big flat screen TV set in the living room and watch YouTube, streaming video from any web site around the world and, of course that Internet favorite, pornography (and we thought pornographic web sites have big audiences today!).  An almost infinite number of web sites on the flat screen TV in any room of the house will further erode traditional television programming.

The combination of the Internet and high speed wireless connectivity continues the economic and institutional disintermediation that has been a regular theme here in this column.  This new home based development is now breaking down the barriers of appliance and technology silos. The TV is merging with the computer and the Internet, the computer is merging with the stereo system and it now possible, though yet demanded by consumers, for appliances such as the refrigerator, the home HVAC system and practically any other appliance to be wirelessly connected and monitored via the Internet.

We are now moving into that universally connected environment that was once only in the realm of science fiction.  When this new technological trend ultimately combines with the emerging touch and voice interface that will replace keyboards, the ease of use will be nothing short of amazing.  Imagine walking into your home and speaking to a wall monitor: “Please turn up the air conditioning, warm the oven to 450 degrees, put the Beatles on in the house sound system and search and download onto the flat screen TV any new videos from today on YouTube about  the presidential campaign.”.  However, in this new digital landscape there are still things that will remain analog such as walking upstairs and taking a shower, but of course the Beatles will be there to keep you company.

A couple of weeks ago I launched a YouTube channel.  For at least the past year, people have been suggesting that I do video blogs or vlogs.  Since YouTube has become the place for videos, it made sense to create a channel there.  The idea is to create short videos that deal quickly with a single topic. Short attention span theater. Currently there are nine videos up, and I will be adding one or two a week.  The first group of videos relate to the themes that I speak about to audiences around the country and have written about in my new book “The Shift Age”.  While the subjects I write about here at Evolution Shift are usually topical, I want the videos to have a somewhat longer life so the subject matter is about this new age we are entering.

The link ...]]> Regular readers of this column may have noticed that in the past two months I have gone to a once a week posting.  That has in part been due to weeks of non-stop travel, speaking engagements and book signings.  I now find myself  being able to sit at my writing table for a whole week. A wonderful feeling! As a result, I will be posting some shorter columns over the next two weeks, addressing a backlog of topics that I have wanted to write about.  Those of you that have let me know you appreciate the slightly longer thought pieces, don’t worry, I will come back to those soon.  

A couple of weeks ago I launched a YouTube channel.  For at least the past year, people have been suggesting that I do video blogs or vlogs.  Since YouTube has become the place for videos, it made sense to create a channel there.  The idea is to create short videos that deal quickly with a single topic. Short attention span theater. Currently there are nine videos up, and I will be adding one or two a week.  The first group of videos relate to the themes that I speak about to audiences around the country and have written about in my new book “The Shift Age”.  While the subjects I write about here at Evolution Shift are usually topical, I want the videos to have a somewhat longer life so the subject matter is about this new age we are entering.

The link to the channel is http://youtube.com/Evolutionshift .  There are places for comments so please do post your thoughts if you like, as I always enjoy your comments.  You can also click to subscribe so you will be notified when new videos get uploaded. For the record my friends at the award winning TeamWorks Media shot the videos and the channel was created by my friends at Tough Customer, an emerging interactive marketing force in the independent music space.  If you like what you see, thanks goes to these two companies.   These videos can also be sourced by just typing in my name at the YouTube home page.  A slight variation of these videos can also be viewed at www.theshiftage.com

Evolution Shift will continue to be the home of the written word.