Description: Two fledgling technologies could dramatically reshape the $60-billion-a-year U.S. television broadcast industry as they challenge the business model that has helped keep broadcasters on the lucrative end of the media spectrum.
Date: April 8, 2013
The threat so far is limited. The number of people using Aereo – backed by media heavyweight Barry Diller, who launched the Fox network in 1986 – is miniscule compared to the number of pay TV customers in the United States. Dish’s Hopper is a more mainstream device that Dish’s 14 million subscribers have access to.
But broadcasters fear the services will continue to expand, cutting into their viewing audience and advertising revenue.
Both the Hopper and Aereo take advantage of changes in how TV viewers get their shows. Increasing numbers are “binge watching,” or tuning into libraries of recorded episodes on their DVRs or on the Internet. As many as 5 million homes now “cut the cord” and get their TV shows from sources such as streaming on the Internet or watching DVDs or game consoles, according to a March 11 Nielsen study. READ REST OF STORY
Questions for discussion:
1. Describe the business (revenue) model that network TV employs? Are these new technologies a serious threat to threat model?
2. What would you do a manger of a TV network to combat what you see happening in the network TV environment? What changes if any could you make to strengthen you position in the market?