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Are Cord Cutters Cutting into Media Profits?

After literally years of forecasting the demise of cable and satellite companies, it appears the end is nigh… and with it some serious concerns for media companies accustomed to collecting fat subscriber fees from cable and satellite providers.

After years of threatening to “cut the cord” and end the mindless waste of money that is a cable subscription, I joined the cord cutter movement by subscribing to the PlayStation VUE service, which gives me access to my local CBS affiliate — allowing me to watch not only my beloved Broncos, but also Uncle Vern and Gary on Saturday afternoons (which is the ONLY reason I need network TV channels) — plus CNN and all the ESPNs and Foxes I can digest. I can also add Showtime as a standalone subscription.

The cost? Roughly $50/mo including taxes. That compares to the nearly $190/mo I was shelling out for Comcast’s less-than-stellar service.

Oh, and I can also DVR events so I can catch my daughter’s soccer game and the Dawgs (that’s the Georgia Bulldogs for you non-believers) without having to compromise.

Vue joins SlingTV, the Dish “Skinny Bundle”, AppleTV, Roku and several other services designed to help extricate America from the madness that is subscription TV.

We’re already seeing the effects of this, as Disney moves to reduce costs in its flagship franchise, ESPN.

So, what does this mean for media companies who have become too reliant upon those subscriber revenues? It means they’d better get their collective act together and find ways to personalize their viewers’ ad experiences, so that they can charge their advertisers more to reach their target audiences.

Furthermore, they’ll need to create content and OTT services that folks want to view altogether independently of their paid TV subscription service. In doing so, they’ll draw eyeballs and impressions to their own digital properties. However, this will require them to completely replatform their entire digital portfolio, at great cost and risk.

Serving one’s customers through intermediaries always carries risk. For media companies, that risk has never been more acute. It’s high time they developed a more personal relationship with their audience or they’ll suffer an inglorious fate. And soon.

By Brian A. McCarthy

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