Tv Cable Industry Identification
Essay Preview: Tv Cable Industry Identification
Report this essay
TV cable industry identificationThe cable TV industry includes all companies that provide entertainment either live or pre-recorded via cable, satellite or other means to consumers. There are three parts of it that form the value chain and finally provide customers with TV services, they are firstly Content Creator and next Content Aggregator and at last the Distributor.A brief overview of TV cable industry: History, Size, Maturity and Growth TrendIf you ask people in U.S. that do you have TV in your home, prepare to be amazed, more than 80% of them will have positive answer, and more than 90% of them will also tell you that they have cables in their homes. How did such a big market and huge industry come into being? Of course all the accomplishment including well developed entertainment and information infrastructure did not happen over a night, and actually the industry has been through around seventy springs and autumns, and the history of it is marked with growth, innovation and glories.As the old Chinese saying goes, a journey with thousand miles always begins with the first step, and in 1948, the history of cable industry began in some local places. Despite that FCC put a lot of limitation and regulations to protect the local radio industry from being crashed, just like nothing can stop the forest fire, the industry grew so fast through 1960 to 2000, and in 1990 this number became 70+ and meanwhile 57% of total households had subscribed to cable video services. However, after 2010 with the fast development of internet and digital cable services, the TV cable industry has been stepped into a mature period and seemed to begin to decline in market share gradually though it was still very steady and did not change much, the subscribers dramatically increased from 65 million in 2000 to the point where nearly 93% of American households have access to cable broadband nowadays, though some of them use cable to connect to internet rather than TV signals.[1]Obviously, the TV cable industry has been grown fast in the last few decades, it has the majority of the market share and the size of the industry has never been bigger than today. Using the data from several surveys, it allows us to have a clear view of how tremendous is the industry. Cable and Telecom is now the largest investor in the growth of the U.S. economy which contributes 48 billion dollars per year and now has invested 341.7 billion dollars in high-quality award-winning content and over $250 billion in infrastructures since 1996. 93% of U.S. households have cable access in their house, enjoying over 900 channels in 2014, 5208 cable systems provided by more than 600 cable operators are now still willing to put money in it to compete in this industry though the cable’s market share dropped significantly from 93% to 53% in 20 years. Despite the decline in market share, the cable’s share of daily TV viewership has increased from 32% to 70% and pay TV of all TV households rose from 61% to 85%.[2]We define that if an industry has passed both the emerging and the growth phases of industry growth, and has little or no potential innovations exist. We can see the TV cable industry is quite matured, it has past the fast-growing period over last few decades and now is steady but already has the trend of declining in market share after 2010, exactly suits the industry life cycle model in Economy. The market is nearly saturated and the behavior of customer is now changing and there is little innovation we can conduct to improve TV cable bundles.
All good things come to an end, probably this famous proverb best describes the trend of the old industry. According to Digital Democracy Survey, the TV industry maybe completely die out due to the fast-growing OTT industry and internet industry. It suggests that millennials now are driving disruptive trends in the industry, they prefer to consume TV and film content on internet. Why? There are many factors that have influence on the trend, the main reason is that OTT offers a much cheaper and easier way for people to access to all the TV shows and films, another obviously factor is the demand for a la carte purchasing of channels. All the factors lead the behavior of customers to change, probably one day we can’t see TV anymore.[3]Factors that affect trends in demand and supply growthAccording to our discussion and research, we discovered some factors that may affect the demand growth of cable industry and will describe them in details as below.[pic 1]In common sense, price will be the most important factor that affects the consumers’ demand. However, the cable industry, which is oligopolies by several major companies, is totally a seller’s market. Data from FCC shows that, from 1998 to 2015, the cable subscription fee increases from 27.88 dollars per year to 64.41 dollars, after inflation adjustment. The price has risen by 131 percent. Although the subscription fee increases every year, the consumers still have to buy the programs in high price as long as they want to watch TV. When turns our eyes to the cable suppliers, firstly we need to understand the current situation of cable suppliers. According to the different functions, we can divide cable suppliers into three parts. The first part, also the beginning of this value chain, is the content creators such as Paramount, Disney as well as the new rising company Netflix. These companies are responsible for the producing of programs, reality shows or other entertainments. The value chain then comes to content aggregators, also called channels, who are responsible for the time arrangement of separate television programs, by combining these programs and integrating into TV channels, people can finally watch TV programs from their television. In united state, the content aggregators can be divided into three categories, the traditional broadcast network, including companies like ABC, CBS, NBS and Fox; the cable network aggregators such as ESPN, TNT and Discover Channel, and the SVOD (Subscription video on demand) aggregator such as Netflix. The last part of the value chain comes to the distributors, who are responsible for laying the transmission network to guarantee that the television signal can be received by the television terminal of each home. Different from the transmission of radio waves in the past, nowadays the television signal transmission mode changes into three modes: the wired cable transmission, the satellite transmission and the fiber optic transmission. The representative companies of these three different modes should be, the Comcast and Time Warner as the cable telecommunications company, Direct TV and Dish as the satellite service provider, AT&T and Verizon as the telecom operators. All of these distributors, as can simultaneously transmit multiple cable or broadcast TV channels, are called MVPD (Multichannel video programming distributor). [4]