Cable faces entrenched competitors in business sector


People watching TVFor cable operators, the residential video segment of the business model is its revenue staple, but it is a mature business. It is looking to business services to expand, but according to an analyst, it will face stiff competition from entrenched incumbents.

The Insight Research Corporation realizes that cable operators see business services as an area of opportunity for growth. To cable, this is important because the residential side of the business is not only mature, it is being eroded by competition with satellite, telcos and cord-cutters.

However, although IRC acknowledges that cable has had some initial success breaking into the market, it sees its prospects as limited. The modest success to date has taken its share of the business into upper single digits, but it may not go much higher.

“While their legacy in providing services to residential segments may give them confidence they can grow profitably in this adjacent segment, the Cable Operator’s challenges will be steep and growth is dependent upon taking market share from entrenched players” says Fran Caulfield, Research Director at Insight Research. “Our study concludes that despite these obstacles, Cable Operators will forge ahead and the entrenched Telco Providers will likely respond with investments, price, and improved performance to combat this threat.  It should be an interesting few years.”

RBR-TVBR observation: If this analyst is right, telcos get it and are prepared to fiercely defend their turf. It underscores what broadcasters must remember:

Broadcasters must remember that they face numerous disadvantages when in head-to-head competition with the myriad of wired or digital competitors out there.

The strength of broadcasters, however, is clear: Local local local local local.

No other medium can match broadcast when it comes to local content, boots on the ground, and the critical emergency service that broadcasters provide makes them a medium that politicians have a vested interest in protecting.

A local broadcaster cannot provide 500 channels. It cannot create scripted programming backed by a multimillion dollar production budget. It cannot hire Oprah Winfrey or Howard Stern or Rush Limbaugh or John Stewart for the exclusive entertainment of its local audience. It cannot strike a deal with the NFL or MLB.

But it can get a camera down to City Hall or report on construction that is creating a traffic nightmare at that key city-center bridge. And it can give precise details on what a hurricane or tornado is doing to the community and how citizens can protect themselves and get critical emergency services.

Local turf must be fiercely defended at every turn – local content must be the primary focus of serious and competitive broadcasters.  That is broadcast’s as-yet-unassailable advantage, and it must be protected.