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Avoiding the Pennsy problem

Comcast logo

Yesterday, Bloomberg published a story on how cable companies are cozying up to Netflix and Hulu. These moves are in order to integrate those services into their respective user interfaces. A line in the story caught my attention: “[this] moves Philadelphia-based Comcast a step closer toward its goal of becoming a one-stop shop for a variety of digital video services.”

PRR logo

The first thing that popped into my head is an apocryphal story about another Philadelphia-based company, The Pennsylvania Railroad (PRR or “The Pennsy”). The story goes that the management of the PRR saw itself as being in the railroad business – not the transportation business. It thus ignored investing in advancements such as over-the-road trucking and air transport, assuming there will always be a major role for railroads.

However, this dedication to the rails ended up with the PRR, once the largest public company in the world with more employees than the US government, laying bankrupt by 1970 with its assets distributed among Amtrak, Conrail, and others.

In recent years, Comcast has been in the forefront of trying to retain its relevance in the changing media space. This has been demonstrated by its acquisition of NBC Universal, to development of the X1 platform, to using in-home auto-authentication for TV Everywhere. Not all pay TV service providers have been so foresightful – but then again, few have Comcast’s deep pockets.

Avoiding the train at the end of the tunnel

It should be no surprise then that all pay TV services should be seeing themselves as deliverers of content – whether it’s through regular cable subscriptions, skinny bundles, or third party services delivered through broadband or mobile. Ultimately, the quality of service and excellence of user interface will win out – whether we end up in a totally “a la carte” world, or if the cable bundle morphs into some digital equivalent.

David Tice is the principal of TiceVision LLC, a media research consultancy.
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