Here is an interesting story from the folks at MediaBiz that just cuts to the core of almost every business issue. It points out the Sophie’s Choice created by some older business models in a time when technology is forcing them to change. First the facts:
A handful of DIRECTV subs stopped receiving HBO after the company started blocking the signal on older TV sets that don’t have the encryption standard High-bandwidth Digital Content Protection (HDCP). DIRECTV… recently added HDCP protection to all HBO-owned channels and “will continue rolling out to other premium services in the coming weeks.” The company said affected customers should replace their HDMI connection with a component video cable and a separate audio cable (emphasis added).
Most folks who do so for a living will tell you that HDMI is a better signal (and therefore picture) than component video. DirecTV also markets itself accurately as providing a better picture to consumers. Without content, however, there is no service – it’s a big, empty pipe. It’s the content providers who are insisting on the use of HDCP. They’re the ones whose business model is most impacted by what they presume is widespread piracy and are insisting on this protection layer. DirecTV is placed in the untenable position of either losing the content by catering to their partners or telling customers to degrade their pictures and potentially losing customers who can get better video elsewhere using more current technology.
Ultimately, customers pay the bills. I believe we win when we serve them and while that may, as in this case, cause problems with partners, suppliers, and others, that downside risk vs. that of angry and vocal consumers is minimal. In this case, the customers who would most notice the downgrade to component video are probably the ones who would know how to cut the cord and get the content they seek elsewhere, hopefully through legitimate means rather than piracy. As businesspeople, we encourage that illegal behavior by choosing any segment over our customers – witness what the music business did for a very long time.
That’s where I come out. How do you see it?
Filed under: digital media | Tagged: business, Business model, business thinking, Business transformation, Customer, Customer lifetime value, Customer satisfaction, digital media, DirecTV, economy, HBO, HDMI, media, Media Conglomerates, technology, Television | 1 Comment »