Tuesday, August 9, 2011

At least it won't be named on your bill in a bad way...

We could sit here and discuss The Wall Street Journal, but any conversation will likely devolve into some nonsense about the merits (or lack thereof) of its editorial page.

The paper's business reporting is top-notch. In our complicated economy, you would do well to read it. I really love how they cover every sector in great detail. I never went to business school, or really took business classes, so I made following the airline industry news in the WSJ my own business program. I tell PR students they should pick an industry they can geek out over and follow in the WSJ and the New York Times. You think I'm kidding? Let's just say the whole argument in congress over the Essential Air Service Program has a completely different feel to it if you understand the basic ways the airline industry works.

Regardless of industry, story after story shows the complexity of nearly every industry. Which brings us to the topic at hand: believe it or not, you have a porn problem.

Yesterday, the paper filed one of its reasonably frequent stories about the adult entertainment industry, this time specifically looking at how that relates to cable/satellite revenues.

You should really read the whole thing, but since you're busy... let's dive in.

Cable and satellite television companies have a pornography problem: Their customers aren't watching enough of it.

Companies' revenue from highly profitable adult video-on-demand and pay-per-view services has been slipping, as the genre's consumers spend more time browsing porn on the Web.

I hear you. You're wondering why you should care. After all, you don't watch porn. (Sure you don't.)

Here's why you should care:

Satellite provider DirecTV cited "lower adult buys" as a cause for weaker pay-per-view revenue in its second quarter earnings. That followed Time Warner Cable Inc.'s admission last week that shrinkage (ed note: Hee!) in the adult category was responsible for more than a third of a $14 million drop in video-on-demand revenue. While only a sliver of the cable company's $4.9 billion in revenue for the quarter, porn is one of TV providers' most profitable segments.

That's right. The company you likely pay monthly so you can watch live sports, news and Game of Thrones is missing out on revenue because you, er, some people won't pay for adult content.

The thing is, shareholders like when companies they invest in make lots of money. They really really really really don't like it when a company misses out on revenue, as that's profit that just doesn't end up back in shareholders' pockets.

Say what you will about capitalism, but them's the brakes. Companies will seek to get that revenue back.

The article notes that cable and satellite providers are going to find some new ways to compete in this sector, citing "exclusive content," competitive pricing (better than free?) and more. And the article addresses the idea that content, prurient or otherwise, has been devalued due to widespread - often free - availability online.

As covered in this blog, some people are taking this to the extreme by cutting the cable cord entirely.

This trend will have consequences. While the article doesn't get there (it's not really the immediate issue), it doesn't take much to connect the dots.

Time Warner, Comcast and the like all offer high speed Internet. It's not too hard to see them saying "Well, if they're not going to buy our TV content and just watch it online, jack the Internet rates." Even DirecTV, which contracts with local Internet providers could likely work this out. My ISP comes to me because DirecTV refers them. That would seem to indicate some sort of binding agreement that could no doubt be adjusted when DirecTV says "You have to pay us more or we stop sending subscribers to you."

We're already seeing mobile phone companies begin to phase out unlimited data. It's only a matter of time before the Internet providers start this. And I'm willing to bet most people will quietly accept the higher rates if it means a la carte programming.

Anyhow, all joking aside, you probably don't watch a lot of porn. But, stories like this from the WSJ show that your cable and internet bills might just be affected by the people who do.

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