In a new report to investors on cable and broadband, Friedman Billings Ramsey media analysts Alan Bezoza and Brian Coynes say that cable's biggest competitive threat for video delivery is not the short-term competition from telcos but the long-term threat of internet-based content delivery.
Pointing to IP telephony, which cable has a piece of as well, and Apple's "revolutionizing" of music delivery via iPod/iTunes, the report says the Internet will become the primary deliverer of video content, with companies like Google, Yahoo and AOL becoming the next big aggregators and distributors of content.
The internet has made "on demand" content the baseline going forward, says FBR.
The report predicts that unless cable, telco and satellite companies adopt Internet-based video delivery models, "their value in the new value chain will become limited to data transport services." But potentially very profitable data transport services.
It says cable is in a good position in the short term to compete on the IP video front. But it sees broadband access as the real future of cable in the long term. Looking 10 years down the pipe, FBR sees cable becoming "utility companies providing bandwidth to consumers running different applications over their data access."
Back on the video side, with a lot of delivery systems competing for product, FBR sees the "pendulum of power" shifting to content providers, though they will first have to figure out how people are paying for that content (subscription or advertising).
Not surprisingly, FBR also sees growth in the PC and home networking markets that, it believes, will become the TV sets of the future.