Editing Unhooked: Are Cable TV and Satellite TV Companies Dying?

Not long ago HBO and CBS did something that roiled the pay TV world: they announced plans to offer their complete programming line-up live and streaming over the internet. Instantly the digital world  burst in exclamations of joy: At first blush it seemed as if both satellite and cable TV companies were  staring at the face of oblivion. After all, if more pay TV networks copied them, what could these  firms offer their viewers that they couldn't get online? The death of pay TV as we know it seemed to be in  view.

Not so fast, cord-cutters. The issue? Cost. HBO Go, the new internet version of HBO, was priced  at $15/mo. which is about $5 more per mo. than what the vast majority of cable and satellite TV  companies charge today for the channel. It seems that HBO was afraid of cutting their own cord with these  companies by underpricing them and going straight to the consumer. And the numbers back up their fear: there are roughly 100 million pay TV customers in America today, versus approximately 10 million online TV watchers -- those who view their programming on Netflix, Hulu or straight from the networks' own websites. A ten-fold advantage in numbers is strong incentive not to anger the cable TV and satellite companies who put butter on HBO's bread through carriage fees.

CBS marketed their online programming much more economically -- just $6 mo. for the so-called CBS  All Access. But will pay TV customers really want to give up their NBC, ABC, Fox, etc. etc. to watch just the Tiffany Network  online? Wait, you point out: won't these networks eventually follow suit and  start marketing their own streaming content? Perhaps so, and maybe even as low as $6 mo. But  then the money starts to add up: $6 for CBS, $6 for ABC, $6 for NBC -- you get the point. It wouldn't be long before the total price of "cutting the cord" with the satellite TV and cable companies becomes greater than their monthly charges --  estimated at an average $64.41 by the FCC -- thus overwhelming any savings.

Actually, it's arguable whether HBO Go will actually go anywhere. At least one study  revealed only 6% of internet-only TV watchers would pay $15/mo. to watch HBO online. Will those eyeballs be sufficient to make the  complete venture worthwhile, given that HBO will most likely have to pony up more money to the internet service providers for greater bandwidth to ensure smooth streaming?

Although many pundits feel pay tv can not last in its current form in a internet era, single networks offering  streaming services on line will not be the existential threat to cable and satellite that many had hoped or feared.  Interestingly enough, only if these networks banded together and offered themselves in a bundle will consumers get the same value that they do with their current cable and satellite TV subscription terms. 

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