The US cable television industry could make an extra $3,500m to $5,000m by the year 2000 by offering a combination of near video-on-demand and cable modems, according to a new report published by Simba Information Inc. The core business of delivery of television services over a wire to homes will not sustain traditional cable concerns in a era of competition and regulatory changes, according to the report, The Future of Cable: Emerging Opportunities for Cable Television Systems. The report argues that the cable television is entering a phase of intense redefinition and while it will be the predominant subscription television service through to 2000, its customer base will begin to erode as competing services grow. Panelists at the recent National Cable Television Association trade show in Los Angeles seem to accord with this finding. On-line services are one threat to the industry. Tom Freston, chairman of MTV Networks Inc told attendees that the children of 90% of families with on -line computer equipment in their homes are watching less cable television. This amounts to around five hours less viewing each week, he said. One of the first ways cable operators will fortify themselves in a newly competitive market is through a continuing wave of acquisitions, trades and mergers, the report asserts. Cable operators need to shore up their two most valuable resources which are their networks and access to the consumer, said Rob Agee, co-author of the report. By 2005, there will be fewer than five primary cable operators controlling more than 90% of all subscribers. Cable operators will begin to bundle video, data and personal communications services to compete with satellite, wireless and telephone company video netw orks. Data services delivered via cable enable operators to leverage their robust and dynamic coaxial fiber networks to revolutionize a proven and lucrative business almost immediately, Agee said. To succeed, cable operators will have to act quickly and aggressively. Failure to deliver high speed cable modem access is not an option cable operators can afford.
