Originally Posted by Drek
Declining user base, more competition from non-traditional sources, no way to dictate terms because not enough of them own enough of the content.
Netflix's CEO has said his goal is for Netflix to become HBO before HBO becomes Netflix. He outbid them for House of Cards to that end. So if Netflix does hit a few original programming home runs how long can Time Warner keep HBO behind their walled garden while Netflix gains mind share? Amazon is now pursuing more digital content to attack Netflix as well. Hulu Plus exists specifically to try out different business models for content providers.
Eventually content providers will find the right model to sell to their customers directly and take the middleman that is cable/satellite out of the equation for all but the most rural of customers. That model is likely going to arrive within the next several years and its all downhill for cable from there. Middlemen never survive too long, the middleman cable company is about to face that reality.
Cable companies will survive. They'll just become ISPs instead of having any role in programming. What they lost in programming revenue they'll try to make up by charging for bandwidth. Good news is it brings them into open bandwidth competition with the telecom and maybe even wireless providers on some level, so they'll no longer have as much pricing control.
I've also wondered sometimes if a major cable player like TW couldn't talk the channel providers into some sort of virtual cable service. Where they can still try their hand at packaging certain things, but give themselves an instant nationwide market. I think it could work well for the first few cable companies that tried it. But the rest of the legacy market would pitch a fit.