Condemned to Repeat History: A Story of Cable Television



Those who cannot remember the past are condemned to repeat it. This quote is often parroted by those seeking to explain follies as they happen. The thought is, if you understand what has happened, you're more likely to change course so that it doesn't happen again. Well, it seems that no matter how many times the internet disrupts a business model, old businesses fail to learn from it.

The latest example is cable television. The major cable companies have been downright curmudgeonly with how they approach the internet. Each network has their own website where they may or may not stream some or all of their shows. Cable boxes are built with user interfaces that look like they belong in a 70's sci-fi show. The catalog of on-demand offerings is dense or sparse depending on network. It's a mess, and the cable companies seem oblivious. They're happy to continue sucking their customers dry while offering inferior products.

This harkens back to a less-recent example: the MP3. You see, like most thirty-something's, I grew up in a time before the MP3 (I also grew up in a time before, gasp, CD's). I remember regularly paying $20+ for a CD. That idea is laughable now. Most newly released albums are under $10, with only a few daring to price themselves much higher. In 2000, as I was graduating high school, album sales peaked at 785 million sales. Last year, albums sales (including digital sales) were about 316 million. Less than half.

The easiest explanation is that the music industry missed the boat. While the MP3 was gaining ground with the release of the iPod in 2001, most music labels were still selling MP3's via their own stores; each hoping to gain ground by promoting themselves as an identity. The truth is, most consumers have no idea which label sells which artist -- they only care about the artist. The splintering of the market left consumers in the dark about the easiest way to get music. Consumers were increasingly using the internet and decreasingly going to Sam Goody.

In comes the internet to make getting music easy (and free!). Record industry folks say that you can't compete with free, so they go on the offensive. Massive lawsuits against Napster and pirates ensue, and the consumer grows comfortable with consuming free music. It was a massive miscalculation on the record industry's part, and it cost them big. They fought digital sales tooth and nail, instead of embracing them as a cheaper way to do business and accepting that the old model would no longer work.

"They're doing something new, and we don't like it."

I can't state this any more clearly: cable television is doing this same thing. Instead of setting up a unified storefront of streaming and downloadable movies and TV, they are increasingly pushing back against consumers. The recent injunction against Aereo smells similar to what happened with Napster. "They're doing something new, and we don't like it." Cable companies have grown fat off the riches of ad-laden, $75+ a month cable subscriptions and now they're getting slow.

Most cable companies will say, "We DO have streaming options via our catalog of on-demand." I can only speak to Comcast, but that idea is ludicrous. The content is lacking, it's often sorted and grouped arbitrarily, has advertising, and it is an utter mess to navigate. The current state of on-demand seems like it's straight out of 2001. Netflix, by comparison, is ad-free, and often I look no farther than the "Your Recommendations" screen to see what I'm going to watch that night - oh, and it's $8 a month! Don't tell Netflix, but I'd pay two or more times what they currently charge.

Hopefully cable companies will get their act together. More likely, we'll end up with some hybrid where cable companies evolve (too late) and we get decent streaming content alongside the excellent streaming content provided by Netflix or Hulu. Another possible scenario is that the cable companies become dumb pipes that deliver the good content provided by other folks. Neither of these scenarios look great for the cable companies. Given the current trajectory, I'm guessing they're doomed to repeat history.