First went the publishing industry. Now, it’s broadcast television watching its profits sink as the internet and the rise of cable TV eat away at its business model.
So, what’s a CBS or NBC or ABC to do? Disrupt its own model, argues Columbia Business School professor Rita Gunther McGrath.
In a post on the Harvard Business Review, she writes:
The basic problem is that the constraints which broadcasters have historically used to protect their profits have now been relaxed — or have even disappeared. Indeed, the New York Times recently noted that the profit model for broadcasters is under assault, citing “cracks in the citadel of TV profits.” The issue is that when you sell things in bundles you can charge for a whole bunch of things nobody really wants — customers will pay for the entire bundle in order to get the one or two things they actually want. This worked for years in cable television — give customers hundreds of channels they won’t watch but will pay for anyway in order to obtain ESPN or HBO.