Sunday, January 03, 2010

TV - The Struggle for a Business Model

Television is in process of  the biggest struggle for a business model since its inception in the 1940s. The original model, the broadcast model, depended on advertising revenues for its funding. But then the cable model entered the scene, which gets not only advertising revenue but subscriber revenue. That made possible more, and more expensive, programming. In the past few years, the big cable operators have been going head to head with the broadcast companies, and the broadcasters are losing, especially those who broadcast local programming.

The internet is looming as the major delivery vehicle of programming. It is there now through the sites of the major networks and specialty sites like But for content, it depends on the traditional sources. When internet TV matures, there will still be an issue of which business model to adopt - the same old alternatives - broadcast or subscriber. There could also be another approach, such as paying for individual programs. Something like iTunes, where subscribers pay 99 cents for an episode of a program.

The outcome of the current struggle between the cable operators and broadcasters will be an important indicator for the future. But it won't determine the final outcome. The final outcome will be determined on the internet.

For an excellent article on the current clash of business models, see this article.  

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