Today, the new entertainment pipe is the one connected to your computer. Via the cloud, it is wirelessly transmitting entertainment to all your connected devices. Technology has enabled a wide array of cloud-based entertainment options to consumers. In this new world, some are opting to "cut the cord" to their set-top-boxes, and choosing to pay for exactly what they want to watch.
Well, not exactly...
The reality of the situation, is that most over-the-top entertainment services lack the content deals that cable companies have garnered through years of relationship-building with networks and studios. So, cable companies are utilizing these relationships to maintain their viability with consumers. A new threat is emerging, however. Some consumers still do not wish to pay premium fees to access hundreds of channels, when all they really want is two or three. Recognizing this, studios are beginning to offer their content directly to consumers, bypassing the cable "middle-man." Studios and networks have begun to go "over-the-top," delivering cloud-based entertainment services via the web, and through mobile device applications.
In order to survive in this new video entertainment landscape, cable companies have few options:
1. Provide more flexible packages and pricing - the main reason why consumers abandon cable TV is because it is expensive. Additionally, you pay for lots of channels you may never watch. If cable companies could figure out how to remain profitable and provide more flexible and relevant service options, they may be more successful in reducing the number of customers who "cut the cord."
2. Re-brand themselves as "entertainment passports" - "Cable TV" is antiquated branding. It reeks of old technology, and places emphasis on the pipe, NOT the entertainment. What is a cable company, then, without the "cable?" It is a set of credentials that enables customers to access the most robust video entertainment, leveraging the relationships that the company has with networks and studios.
3. Unchain themselves from the "set-top-box" - the biggest threat to the cable box isn't a connected iPad or iPhone, it is a connected TV. Yes, consumers are watching video, via over-the-top services on their mobile devices. However, the majority are still watching movies and TV shows on their TV. Cord cutters are using IP enabled boxes to access over-the-top entertainment services directly on their TVs, but that won't be necessary in the near future, when most TVs will access the Internet directly. In that scenario, cable companies must be prepared to offer "over-the-top" service, that can be accessed without a set-top-box.
4. Create brand loyalty with the next generation of "bill payers" - Cable companies need to build a brand with a younger demographic, because it is this demographic who is adopting "over-the-top" services for video entertainment. Many of these consumers do not even have TVs, and are only watching video on their laptops or other mobile screens. Most are on Facebook, and even consuming video entertainment on social network platforms. Cable companies have to integrate with the platforms that are widely adopted by this young demographic.
5. Monitor usage and deliver personalized services - The thing about cable, is that it is mostly "unidirectional." It is difficult to analyze usage patterns for the purpose of service optimization, customization, and personalization. Cloud-based services are increasingly leveraging usage data, via the Internet, to deliver personalized recommendations to consumers. Cable companies must figure out how to deliver "custom entertainment channels" that provide more relevant entertainment to their customers.
Jonathan Lupo - http://www.twitter.com/userexperience
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