How technology will determine the future of the media industry
is an evolving conversation. A variety
of perspectives on the current media environment may offer some clues as to what
the future holds, but while everyone is lining up their bets there still isn’t a
clear consensus on who will be the winners. One thing is certain, though:
success will greatly depend on who will control access to the flow of content.
For all the talk of digital distribution, Media
Shift argues that cable remains a profitable and dominant player, producing
billions of dollars in subscription revenue per month. Early speculation about cord cutting, or
replacing subscription cable in favor of alternatives like Netflix, Hulu, or
Apple TV, has simply not materialized in substantial numbers. Instead, analysts have attributed losses in
cable subscription rates to the recession:
fewer households mean fewer televisions for which to secure
subscriptions. Consumers are not
abandoning the cable subscription model itself, despite price increases, the
emergence of new competitors, and no shortage of dire predictions.
Even personal devices like the iPad, widely speculated
to portend changes in the way consumers interact with media, often find their
users held within the subscription orbit via authentication, or the practice of
verifying a paid subscription in order to access content. Cable companies continue to hold tremendous power
given that cable alternatives are at the mercy of the large media companies in
acquiring licenses for programming. Netflix’s failure to renew their deal with
Starz has resulted in both the loss of a significant amount of content and
increased pressure on the company.
Several cable providers have even introduced their own rival streaming
services. In response, Netflix has
ventured into developing original content, which critics suggest is a potentially
expensive and slow enterprise. Shareholders
recognize that access to content, as well as the ill-executed price increases
enacted last fall mean the future of Netflix is less certain than previously anticipated.
If they can’t beat them, rumor has it that Netflix may join
them: the company is supposedly in talks with cable operators to integrate
into the cable model by adding Netflix as a subscription service similar to
a premium channel that would appear on the cable bill. Though critics contend this approach won’t solve
Netflix’s content access problem, it could bring an increased number of
subscribers.
YouTube seems to be making the opposite gamble. In an era of simultaneous audience expansion
and fragmentation, YouTube is currently developing a portfolio of online niche
channels of a type too expensive under the economics of traditional television. They’re betting that the current media market
is reminiscent of the early emergence of cable, which saw the offering of
specialized channels laughed off by the same media interests that ultimately ended
up purchasing them.
If the past is any prediction, the only safe bet seems to be
that access to content matters, and that consolidation and further acquisition are
almost certain.
