Wednesday, December 14, 2011

2012 -- Virtual Cable Companies Coming -- Apple, Google Likely Amongst the First

More and more signs point to more consumer choice for "real" live, linear TV programming coming soon -- in 2012.

Case in point -- the "virtual" cable company (click here to read a story from Peter Kafka of AllThingsD on this subject). No more will many consumers be limited to cable or satellite TV. Instead, they will look to familiar names -- most likely Apple, Google and Amazon, among others -- to provide the full Monty; the full Kit n' Kaboodle; the whole enchilada. I'm not just talking about Netflix-style video on-demand with its limited, and frequently frustrating, library of premium content. I'm talking about all the "real" channels of live TV that you want -- including ESPN. To do this, the new "virtual cable" guys will need to cut extremely expensive content distribution deals with all of those premium broadcasting channels. But, this will happen -- the ultimate rewards (and stakes) simply are too great for those candidates.

Think about it -- there will be no physical footprint limitation on this TV distribution opportunity. Unlike the cable guys, Apple, Google, Amazon and others can use the "dumb pipes" (broadband) laid by others to facilitate a fully national TV distribution service. In other words, these "virtual cable" guys will use the real cable guys' assets to cannibalize the real cable guys' business.

What do I think? Google most definitely will be amongst the first in 2012 -- first rolling out this kind of service in limited markets (I recently predicted this in my video predictions for 2012). But, my bet is that Apple too will be amongst the first. Why? As I have written repeatedly, there is no question in my mind that Apple will release its own REAL all-in-one flat screen TV (called "iTV") in 2012. And, make no mistake -- this iTV will contend that it completely re-imagines the entire TV experience to make it, well, more of a real fully seamless hardware/programming experience. This means full programming -- which must include "real" linear TV.

So, there it is. Q.E.D. Coming soon. Will be fun to watch ...

(Oh, and by the way, all is not lost by the cable companies in providing so-called dumb pipes; broadband services provide significantly higher margins than the content distribution services themselves, due to the massive costs involved in acquiring those content distribution rights. And, here's the deal -- the more "virtual cable" companies there are, the more consumers who will require high-speed broadband. That's a good thing for the "real" cable guys ....)