The National Association of Broadcasters or NAB, and in fact the entire pay TV industry is faced with enormous transformative pressures. Revolutionary changes should be the focus of their upcoming convention. However, what we are seeing so far in the industry are only evolutionary changes. This is not enough to meet the coming tidal wave of change.
Yesterday’s leaders should be charging into new directions because new competitors and new technologies are rapidly trying to do the same thing. Challenging and reinventing the pay TV space and threatening the status quo.
The pressures companies in the NAB space are experiencing are not unlike the challenges faced by the local telephone companies or Baby Bells of the early 1990’s. They too had no competition. They too saw industry changes coming. Except the Baby Bells jumped into action and become very aggressive. They lead the charge and they won.
Pay TV Industry Facing Revolutionary, Not Evolutionary Changes
We saw seven baby bells merge into three. We saw small companies grow to very large competitors. We saw separate industry segments come together and be offered by fewer, larger companies. We saw the local phone companies start to sell wireless, internet, long distance, television and more over the next couple decades. We saw the long-distance industry disappear.
Companies like today’s giant and rapidly growing AT&T (T), started out as a small baby bell SBC which acquired another baby bell, BellSouth and Cingular a decade ago. Today the local phone companies are no longer just local phone companies. Today, they are leaders in the wireless, wire line, internet and television spaces.
In fact, today these companies are some of the hottest new competitors to the pay TV space. Example, AT&T acquired DirecTV and is now offering wireless TV or mobile TV. This is not only competing with, but transforming the entire pay TV industry.
AT&T Changing Pay TV with Mobile TV and Wireless TV
AT&T DirecTV NOW success with wireless TV or mobile TV is putting pressure on pay TV competitors like Comcast (CMCSA), Charter (CHTR) and even Verizon (VZ). AT&T, Verizon and CenturyLink (CTL) started their journey into television with their Uverse, FiOS and Prism IPTV service a decade ago.
Now with the acquisition of DirecTV and the innovation with mobile TV, AT&T is transforming the entire space again. And that is just continuing. This is the challenge they are posing to every pay TV competitor.
Comcast, Time Warner Cable (TWC), Charter, Cox and other cable television companies tried wireless several years ago. They all failed. In fact, other companies like Facebook (FB) and Amazon (AMZN) Fire Phone also entered the wireless space and failed as well.
However, during the last year or two, suddenly wireless and television are coming together. Suddenly, AT&T is letting DirecTV Now customers watch television on their smartphones and tablets from anywhere in the USA. This is innovative and transformative. This is creating enormous competitive pressure on today’s cable television industry. It also creates huge new opportunities and challenges.
Comcast Introduced Xfinity Mobile
So how is cable TV responding? So far, they all say they need to re-enter the wireless space with an answer to AT&T. The only one to introduce anything new was Comcast last week.
Comcast introduced their Xfinity Mobile service last week. In my opinion, this is just what they needed to do. However, the announcement was unfortunately not very exciting.
True, they will be selling iPhones and Androids this time… and that’s good. True, they will be offering phones at a low cost. That is also good. However, they will only sell wireless phones to Comcast TV customers. That means they cut the size of their potential market significantly.
The big disappointment was there was little mention of the innovation around wireless TV. Comcast should have had this in the headline of their announcement, rather than buried in the middle. If you were listening, you most likely missed that big news.
This let the gas out of the balloon for me. What it says to me is that Comcast doesn’t understand the challenges they face. So, they buried the most important part of their announcement. They don’t seem to understand how to stoke the competitive fire. The reason is that they never had to compete before. Will that weakness hurt them going forward?
Wireless should not have been just an add on. And wireless TV should not have been lost in this announcement. This should have been a big-time announcement of historic proportions. This should have been about how Comcast was going to reinvent the entire industry. They should have taken this opportunity to try and capture the imagination of the marketplace. They didn’t. All they focused on was wireless as a soft, added feature to their existing TV bundle.
New Technology and New Competitors Are Changing Pay TV
Actually, Comcast says they are not going to be a hot wireless competitor to AT&T Mobility, Verizon Wireless, Sprint (S) and T-Mobile (TMUS). Instead, they are going to be happy picking the low hanging fruit. This does not sound like a disruptive force to me. Does it to you?
If this may be their strategy, I don’t know if it will be enough to move the wireless needle. And this is the problem with the entire cable television industry today. It needs to be revolutionary, not evolutionary. And what every pay TV competitor needs is something revolutionary. Something like wireless TV.
This is the same challenge every pay TV competitor faces, large or small. Every other competitor should take a lesson from this mistake. They should create a big event around their entry into wireless TV or mobile TV. This is going to transform the space. If you are a player, you can win. If you are not, well, you can lose. Just ask Blackberry (BBRY), Nokia (NOK) and Motorola (MSI) lost.
And this is just one of many transformative issues faced by cable TV or pay TV today. Everything is rapidly changing. Either competitors get on board and lead the charge, or their world will change around them. When that happens, you get left behind as the wave moves ahead. Remember, this kind of transformation happens quickly and takes no prisoners. So ask yourself, are you ready for this next transformation wave?
Jeff Kagan is an Equities.com columnist. Kagan is a Wireless Analyst, Telecom Analyst, Industry Analyst, speaker and consultant. He follows wireless, wire line, telecom, Internet, cable TV, IPTV, Cloud, Mobile Pay, FinTech and communications technology. Email him at [email protected]. His web site is www.jeffKAGAN.com. Follow him on Twitter @jeffkagan