There's a huge problem with this model. Right now it works because its a small enough percentage. But the problem is that the content providers would be losing a huge portion of their income w/o cable.
Right now your cable provider pays large percentage of your cable bill back to the networks. ESPN get's $3-4 dollars per sub a month. That's literally ~4 billion in revenues from subscriber fees. Even now HGTV and Food Network are getting pulled from Cablevision over an argument over pennies per month per subscriber (they're around 15-25 cents a sub ESPN gets the most in fees).
You can't just cut the cord and not pay fees the whole model for content breaks down.
You can still pay legally for content on services like Amazon and Vudu but I'm not sure you're going to end up saving that much money.
This leaves pirated content, livestreamed via something like Justin.tv or another service (and they have to be showing up in some attorneys' crosshairs) or bittorrent content.
I'm sure more and more people will be switching to the internet for their video transport layer, but its not as simple as most expect. I think right now is the heyday for internet content, but I think in the next two years you're going to see a serious crackdown on unauthorized streaming services (including boxee who likes to scrape websites for content)
The economics will certainly be disrupted, but I don't think it will be as rough as it might be. Apple's recent negotiations for a cable subscription package show that content owners might actually make more money per subscriber:
"Another part of the report has Apple paying $2 to $4 a month to the major networks per monthly subscriber, and $1 to $2 for a cable subscriber. "
It's eventually going to grow from a small percentage to the majority. The question is what will the end result look like and who will be the casualties along the way?
Right now your cable provider pays large percentage of your cable bill back to the networks. ESPN get's $3-4 dollars per sub a month. That's literally ~4 billion in revenues from subscriber fees. Even now HGTV and Food Network are getting pulled from Cablevision over an argument over pennies per month per subscriber (they're around 15-25 cents a sub ESPN gets the most in fees).
You can't just cut the cord and not pay fees the whole model for content breaks down.
You can still pay legally for content on services like Amazon and Vudu but I'm not sure you're going to end up saving that much money.
This leaves pirated content, livestreamed via something like Justin.tv or another service (and they have to be showing up in some attorneys' crosshairs) or bittorrent content.
I'm sure more and more people will be switching to the internet for their video transport layer, but its not as simple as most expect. I think right now is the heyday for internet content, but I think in the next two years you're going to see a serious crackdown on unauthorized streaming services (including boxee who likes to scrape websites for content)