Notes on cable – Part 6 – Piracy

Piracy is going to get a lot better in the future.

1. Internet speeds will get faster due to Moore’s Law.
2. Open source software will get better as contributors keep adding code.

My belief is that many of the dynamics that played out for the music industry will play out for piracy.  Piracy itself is a form of competition.  Content companies will be forced to compete with their own content.  The companies that will fare best against piracy are the ones who can put together an offering that is more compelling than piracy (e.g. Netflix).

In the long run, I think that most of the industry will be dominated by a small handful of Internet TV services with big content libraries and excellent software.  Content companies will increasingly need to become good at software.  Usually software markets are dominated by a small handful of companies.  If that’s the case for Internet TV, then many of the traditional players will be losers.

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Thoughts on media stocks (CHTR, LBTYA, DISCA, VZ, WWE, NFLX)

Overall, I think that cable companies are extremely well positioned going forward.  The value of the information carried over their pipes will naturally get better due to better content on the Internet, Internet TV getting better, and illegal downloading getting better.  Going forward, I think that video content will be increasingly higher quality and cost less.  This will give cable companies more pricing power.  The cable companies that may do the best are the ones that can raise prices without fear of competition.

Notes on cable – Part 5 – The future winners of Internet TV

The future winners of Internet TV will likely be the companies that can:

1. Intelligently buy undervalued content.
2. Achieve scale (or have scale).
3. Create good software