More Confirmation That Incumbents Restrict Online Video

[Commentary] It's puzzling to many observers why so many programmers don't make their content more widely available online. It seems like programmers are leaving money on the table. Shows that are available online are talked about more, watched more, and pirated less. Viewers are demanding easier access to shows that is not tethered to their home and does not require a cable subscription, yet the market is not delivering it. Why is this?

There are two big reasons. The giant content companies have a symbiotic relationship with cable. They sell programming exclusively to cable (and satellite) and charge a lot for it. This forces cable companies to raise their bills but, since they're the only source of programming people want, they're able to. There's nowhere to switch to. Only now, as cable bills are reaching unsustainable levels and cable companies are seeing that online video has the technological potential to become a competitor to cable, are some cable companies finally objecting publicly. The second reason is more subtle. Smaller programmers don't have the ability to dictate terms to cable companies the way some large ones do. But cable is their largest customer. If a large cable company tells an independent programmer that it can't distribute its content online, then the programmer has little choice but to comply. These issues highlight how concentrated markets prevent companies from responding to customer's needs. Concentration in the programming market leads to absurd situations like every cable subscriber, even non-sports fans, paying about $5 per month for ESPN. Concentration in the distribution market allows existing distributors to use threats and incentives to hold back the development of alternative distribution channels.