Summary
1. In addition to being an “online video solution,” Time Warner Cable could remove a prominent competitor. 2. The MSOs would not have to spend as much time and resources in developing their own video on the Internet offerings. 3. Perhaps companies like Joost cannot be stand-alone entities indefinitely.
Analysis
Maybe the assumption that companies such as Hulu and Joost, would be different than VoIP over-the-top suppliers was correct only to a certain extent. The former category is indeed being seen as a real threat to the cable TV companies, while the latter one really never became a competitive force. However, we are in only the beginning of this new concept of online video and it just may be the case that long-term viability of distinct content companies may be limited. It is a situation in which the barriers to entry appear to be relatively low. In addition, direct diversification potential seems to be limited.
In the future in which there could be one large IP spigot, bigger firms such as the MSOs will need to tackle the broader issues of achieving consistently high resolution, IP-based content. In addition, there will be the challenges in actually getting to a really interactive, application-based platform. And so there is a need for companies to become part of entities that have the resources to deal with these matters, such as YouTube pairing up with Google.
