There’s been a discussion lately about the viability of Click. It seems the Cable TV business is losing money – in part through the rising costs of programming content, and partially because of the way the city cooks their books, writing off capital construction costs of the network.
The wholesale internet business – where Click sells wholesale bandwidth to the three local ISP’s (Rainier Connect, Advanced Stream and Net-Venture) is making a whopping 60% profit!
Click’s idea is that the internet sales should subsidize the cable TV operation. To me, that’s stupid.
Some people say that if you subtract fixed capital costs, maybe they are making money on the TV side. But it won’t last. Cable TV is finished. It’s just a matter of how long it takes to die. Internet streaming technology is just too good for consumers and it will supplant cable.
Gas streetlamps were big – until the electric light came along; horses and buggies were the rage until autos were invented; VHS tapes were number 1 until DVDs came on the scene; CDs supplanted vinyl LP records. Technology happens.
Comcast and the other cable TV companies want to keep their current business model but it won’t be possible. Streaming video, that is true “a la carte” video is just too good for consumers to pass up.
Why pay for 80 channels when you really only watch 6-10?
I think it’s clear that Netflix has been the key change agent – the main disruptive force. It’s too easy, to inexpensive and too convenient to pass up. You can watch what you want, when you want. Binge viewing is becoming popular because of Netflix. Watch a whole season of a show in one night.
Comcast’s response was DVRs where you can record several different shows then watch them when you wanted. But if you have true a la carte video that you can stream anything, any time, why would you need a DVR? Comcast’s Xfinity DVRs are a finger in a leaky dike – doomed to failure.
You can’t stop progress or innovation.
The fact that the tide is finally beginning to turn is evidenced by the recent announcements by HBO and CBS that they will offer stand alone (where you don’t have to have a cable TV account) streaming products. Now that they’ve thrown their hats in the ring, the other large content providers will almost certainly follow – no one want to be left behind.
The cable and content providers may lengthen the adoption process but they cannot prevent it.
So yes, the smart thing to do would be for Click to get out of the cable TV business ASAP – if they can actually find a buyer, that’d be great. But if they can’t, they should simply shut it down. There comes a point in time where you have to cut your losses.
The era we’re currently going through is not going to be easy: many technologies/industries are caught up in the move to IP based service and will fall by the wayside: DVDs, CDs, Cable TV, home phone service, and more. Many have already fallen: remember the big video rental stores? Hollywood Video, and Blockbuster Video? A whole industry gone. How about big box stores? Remember CompUSA? Circuit City? How about huge bookstore like Borders and Barnes and Noble? Online sales have brick and mortar retailers in a death spiral.
The internet is changing many, many aspects of our lives. Disruptive technological change can sometimes be painful.
We all need to look to the future.
To use an analogy, pretending it’s the late 1990’s, the trick in this case is to make sure the city of Tacoma isn’t stuck with a whole store full of VHS tapes when DVD’s are becoming popular…
It’s time for Click to sell off its VHS tapes – Before they’re worthless.
And as a side note: I honestly can’t figure why people in the city of Tacoma have cable anyway. I’ve got a small antenna on my house and I get about 50 local HDTV channels. I have great reception. And it was a one-time investment of about $100. I have Netflix, and with that and other media available by streaming, I’ve got all the TV/video coverage I need. If you live in the boonies I can maybe see cable But not here.