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...What's going to kill the TV business, or at least challenge it, isn't Apple designing the perfect remote or Microsoft designing a superior guide. It's two things.
First is the rising cost of entertainment, which is happening right now. The sitcoms and great dramas you love cost more to produce every year because they're labor intensive. Sports rights are seeing even worse inflation. ESPN recently signed a deal with the NFL to pay 73% more each year for Monday Night Football. So Comcast and its ilk are stuck between rising programming costs and flat-lining middle class wages. That's a problem, and eventually something has to give. But in the short term, providers can merge and channels can be cut and costs can be saved. Expensive shows and sports rights shouldn't destroy the TV business on their own.
Combined with a second trend -- the accelerating exodus of attention away from television -- the TV business might really be in trouble. But this second trend is still more of a projection than a reality. One hundred million households still pay for a bundle of networks. That number isn't really going down. With the pace of household formation tripling in the last year, it could even go up. The number of cord-cutters -- households that have replaced the bundle with over-the-Internet video like Netflix -- is in the low single-digit millions. TV-providers have even found a hedge against cord cutting. They've become Internet-providers and expanded overseas to make up the revenue they're not making here. Cord-cutting is a marginal trend that could sneakily turn mainstream, creating an innovator's dilemma for TV and cable. But not yet.
Via Peter Rosenberg
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