Television Programing

In the beginning, television programming was free for anybody with a television set and an antenna. Unfortunately, there weren’t very many channels to choose from and they were all loaded with ads. Later, cable companies found success for themselves by charging consumers to pipe an ever increasing number of channels into their homes. But it still seemed like there was never anything good, and it was all still loaded with ads. Now advanced telecommunications technology enables consumers to access television and video content on demand via the internet, provided they have a broadband, or high speed, connection. The increasing market penetration of broadband internet service may be leading consumers to abandon traditional television in favor of internet based on-demand video distribution, and forcing traditional television content producers to find new ways to maintain profits in the wake of this change.

Watching high quality video content on a television screen via the internet has become easy for the average consumer. Streaming video players, which connect televisions to the internet and allow someone to easily navigate the vast sea of internet video content, are readily available for purchase in electronics stores. One such product, the Roku 2 HD, retails for about $60 and allows access to hundreds of online video channels without subscription fees over a broadband internet connection (“Choose your Roku”, 2011; “Roku channel store”, 2011). Meanwhile, Cox Communications charges about $20 per month for a very basic programming package consisting of 23 channels (“Cox Communications”, 2011). Since the Roku only costs the equivalent of three months worth of the most basic cable television service and does not require a subscription ...

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...ly $734 million of that is from video (Perren, 2010, p. 74). While the advertising revenues are still small for online video, the number of people that are viewing is large, and it is getting larger quickly. In November 2010, The Washington Post published an article that that noted Netflix’s video service alone made up roughly 30% of all consumer internet traffic during the busiest times (as cited in Kang, 2011a). With so many consumers shifting over to online viewing, it is apparent that the industry will have to find a way to make it work.

The consumer trend towards broadband internet connections and internet based on-demand video services is clear. Cable companies will continue to lose their once dominant positions unless they are able to leverage these new technologies to improve their customers’ experiences while increasing value of their advertising space.