So, what killed cable TV? Well, one argument is greed.
Nothing…NOTHING will be as profitable as the legacy cable model biz model
At peak — 100 million people paying $8/month for something (ESPN) the vast majority never watched or even wanted 👇🔥👀 https://t.co/MU7zqOm1BL
— Rich Greenfield, LightShed 🔦 (@RichLightShed) February 14, 2020
With profit margins of $8 a channel for ESPN, you can see why cable TV was so lucrative. So, did greed do them in? Yes and no.
The truth is many cable TV companies had no real competition for many years. This made it easy for cable companies to agree to ever higher contract prices with content owners because they knew the end user would agree to pay it.
Now though Hulu, YouTube TV, Sling TV, AT&T TV NOW, and others offer live TV streaming services to compete with cable. This leaves cable TV companies stuck with expensive contracts that prevent them from competing with smaller services like Hulu’s live TV offering.
Cable TV is not alone in being stuck with old contracts. Disney recently announced that they want to offer smaller live TV packages. To do that Disney said they need to strike new deals with the content owners. So, even streaming companies are being hindered by their old contracts.
Greed was not so much an issue with cable TV as was just the lack of competition. When there is no competition there is no need to push for better deals. This results in paying more than you would if you were concerned about losing customers.
Now though cable companies and streaming services are stuck in contracts that the content owners are not interested in changing. For the content owner there is no reason to lower the price until they feel the pain.
For now, we will have to wait and see what happens next but clearly Americans have had enough with overpaying for TV.
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