There a number of reasons why people still subscribe to traditional pay television (satellite, cable, telco).
Just a year or so ago it was about network television shows & movies.
But very quickly those shows are finding their way online. Either thru illegal p2p networks or legal places like itunes, amazon, netflix and hulu.
Plus those traditional shows are just the tip of the iceberg. The web has much more to offer. Fred wrote a great post a few days ago about a recent evening that where he VJ’d 90 minutes of various clips on youtube with his family. You can’t replicate that experience with your standard cable box.
Web video critics have long believed that even as more shows go online, pay television operators will always have the advantage because of live events (news, sports, music etc).
As we saw with inauguration, CNN and otheres offered live streams of these events online. MLB has an amazing live product at MLB.tv. On June 1st, you can watch a live Dave Matthews concert on Hulu. There is more live content coming every day.
To be fair, there are still a number of barriers before the web can fully compete with live programming. Real technical challenges remain as well as economic issues as well. But these are going to be solved. I’m quite optimistic about that.
As these problems become solved, I think we are going to see cable start increasing ISP fees.
But here’s the thing: if ISP fees increase it will only accelerate pay television churn. Generally consumers have a fixed amount to spend on entertainment. And increasingly consumers would rather pick internet access over pay television. Certainly that is true with the younger generation.
If you could only have one which would you pick?