source: https://huesofasoul.files.wordpress.com/2014/10/game-of-thrones.jpg

A recent article by Issie Lapowsky titled “Down With Cable! Why HBO is Finally Launching a Standalone Streaming Service” highlights the difficulties cable companies face in their quickly changing industry. The article indicates that HBO would gain more viewers by establishing a streaming service, as many consumers see HBO as “one of the last remaining reasons to stick with cable” (Lapowski).

This decision, and the fact that it is highly beneficial for HBO, demonstrates to me the shift in power away from Cable networks due to cost leadership strategies, superior value propositions and effective substitutes provided by competitors. Netflix, for example, provides a massive variety of television programs for $8 every month, a rate that is substantially less than the $120 monthly fee charged by many cable companies. A poll presented in Lapowski’s article indicates that most participants would pay $12 every month gladly for an HBO streaming service, as that is still 10% of what they pay for cable (Lapowski).

In terms of value propositions and substitutes, I think the high cable rates has encouraged many companies to create cheaper and easier means for consumers to watch their television programs. I can find most programs online for rates far bellow those of the cable company without compromising quality. I predict that this competition will likely prove to be the end of many cable companies, unless they manage to establish a new system that is able to better compete with these internet providers.

Source: http://www.wired.com/2014/10/hbo-streaming-service/