We live in interesting times.

Amongst a sea of monolithic companies, we’ve seen small startups rise and disrupt massive industries.

No company is too big too fail anymore. Even safe (non-tech) industries are being disrupted. Just look at what Tuft and Needle did to the mattress industry.

The hyper-competitive nature of the markets comes as no surprise. The real shock comes from the response of the large companies whose very futures are at stake. It’s almost as if they are so set in their ways that they can’t possibly pivot to a sustainable business model.

Take cable TV, for example: an industry that got flipped upside down by Netflix. Every year, millions of people “cut the cord” and switch to online streaming.


In case the answers isn’t painfully obvious, most people make the switch for two reasons:

  1. Price
  2. Quality of Content

Streaming services are cheaper, have larger catalogs, and eliminate commercials.

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The response from the TV industry? Get into streaming of course!

Companies like Sling, DirectTV, Hulu, and YouTube now offer streaming TV. You can watch cable TV from any of your devices. Great news, right? Not really.

They missed the point.

These new cable streaming services cost around $40/month. They still include commercials, but now you can watch the commercials from your iPhone.

Notice how these companies didn’t address the two obvious pain points listed above. Instead, they offered the same exact service at a price equal to a Netflix, Hulu, and HBO Now subscription combined.

The only added benefit is streaming from any device. I haven’t done the market research, but I’d wager that if you asked cable subscribers why they cut the cord, very few would say it’s because they can’t watch TV on all of their devices.

The numbers don’t look too promising either.

In January of 2018, YouTube reported having 300,000 TV subscribers while Hulu reported having 450,000 subscribers. That’s almost a million.

That number may seem high until you compare it to Netflix’s 100 million user base.

This doesn’t mean TV is dead. There is still a lot of value to live content, such as sporting events and news. The problem is these companies failed to address the pain points of cable customers. The pricing isn’t that much cheaper and the commercials are still there.

The Takeaways

There are two main takeaways from this.

#1 – Don’t Get Greedy

Cable TV is a declining industry. Historically, they’ve monetized through both commercials AND monthly subscription costs. That model doesn’t work anymore.

Companies generally choose between monetizing through commercials/advertisements OR a paid subscription (case in point: YouTube vs. YouTube Premium).

In the case of the cable companies, it’s a complicated system involving a lot of companies, but the point remains the same. Who wants to pay $40/month for content stuffed with advertisements?

#2- Listen to Your Customers!

If you’re creating or promoting a product, make sure you’re focusing on what customers actually care about. That is the only way to add value and run a sustainable business.

This isn’t exclusive to big businesses either – I see small businesses make the same mistake all of the time. Business owners become attached to a certain feature of their business and neglect the customers’ preferences.

For example, a local restaurant may be excited about the fact that they offer the highest quality beef in a 25-mile radius, whereas the surrounding college students may only care about price.

“The customer is always right” applies to more than just customer service. It’s how the free market economy works. If you want to thrive, pay attention to your customers.