The End of TV as We Know It

While cable companies and networks bicker, consumers are staging a video revolution

By Rana Foroohar Monday, Aug. 26, 2013
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    Television is now being disintermediated by the Web, just as print was. The transition has taken longer; television was starting from a bigger, richer base. But now that the technology is maturing, the shift will speed up. Already, you can see players like Liberty Media's John Malone scrambling. They hope to consolidate the cable industry and hold on to pricing power in negotiations with broadcasters and new players like Netflix that require Internet access for streaming. But analysts like Moffett believe that the window is closing and that federal regulators won't allow mergers that threaten the viability of streaming-video firms. None of this means that cable companies will go out of business. Indeed, they are still the only option for broadband Internet in much of the U.S. But unless they can begin to charge broadband customers on a usage basis, they will have no mechanism to recoup lost revenue as their video businesses erode.

    This transition will also create new pressures--and opportunities--for content creators. When CBS wants to double what it charges for shows, it won't be able to hide behind Time Warner Cable anymore. If you click on Dexter and have to pay more, you'll know exactly who is charging you. New content creators, like Netflix and the YouTube production studio in L.A., are adding to the competition. As the click-to-watch model becomes ubiquitous, the real winners may be technology companies like Google, Apple, Microsoft and Amazon that operate across entire ecosystems, selling content and also designing devices and controlling lots of consumer information. Amid all this disruption, it's worth noting the other Big Media story of the moment: Amazon founder Jeff Bezos' purchase of the Washington Post for a song. If cord cutting is any indication, the story of television and the story of newspapers may have very similar endings.

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