Tag Archives: innovation

Cable Television becoming obsolete

Thesis: An industry that will experience significant change and innovation is that of cable television networks.

This change has been a long time coming, with the innovation of the high speed Internet access available almost nationwide. Cable TV is going to start to become obsolete in the form we are familiar with currently. Television viewing is going to shift to being predominantly an online activity. This shift has already started to take place with the likes of Netflix and HBOGO. These companies success have already demonstrated that this is an industry poised for disruption. Millenials are starting to take over as the dominant power generation and are much more comfortable with the Internet and streaming shows online. This is demonstrated with the vast number of millenials who use online television streaming services already as compared to other generations.

The biggest change in this industry is that people are going to stop paying for bundles of random TV channels that they don’t watch, but will instead pay for specific channels or shows that they watch (a la carte style i.e Netflix or HBOGO). There is an opportunity for cable companies who currently make most of their revenue through cable subscriptions, to innovate and beat their competitors at moving online. This can be accomplished by creating a service of video on demand in which their own subscriptions. Either allowing the consumer to only pay for what they watch, or for smaller bundles of similarly watched channels. This is going to happen sooner rather than later as Dish has already announced plans to stream ESPN, TBS, Disney, among other channels online for a small $20 per month. As Ebenezer Samuel writes about this Dish package, “No matter how you look at it, Sling TV (Dish’s bundle) is intriguing, and, given time and nurturing by DISH, it has loads of potential. A legitimate and full alternative to cable TV is on the horizon somewhere.” This is a good start, but the new opportunities lie within allowing users to select which channels they watch. If someone only ever watches ESPN, then they should be allowed to only purchase a subscription to watch ESPN and not have to pay to watch the Food Network as well.

The biggest drawback of Sling is that it does not offer any of the major cable services currently. However, Apple is setting about disrupting this. As Miriam Gottfried writes in her Wall Street Journal Article, “Apple’s “skinny” bundle will have about 25 channels, a far cry from the 300-plus ones typically offered through cable systems. Broadcast networks owned by CBS, Walt Disney and 21st Century Fox will be among those.” This is the start of the demise for cable television providers. Unless they recognize this trend away from cable TV subscriptions and act quickly on it, some companies are going to be left in the dust.

Revised Post #3: The Hyperloop will Disrupt the Shipping Industry Entirely

Thesis: The Hyperloop will have long-term economic effects as it disrupts many industries, the first being the container shipping industry.

Elon Musk’s vision for the hyperloop is finally coming to fruitation. This innovation will disrupt the transportation industry as soon as it is implemented, and help clear up traffic immediately.

The hyperloop is as Bruce Upbin wrote in his Forbes article, Hyperloop Is Real: Meet the Startups Selling Supersonic Travel,

It’s that far-out idea billionaire industrialist Elon Musk proposed in a 58-page white paper in August 2013 for a vacuum-tube transport network that could hurtle passengers from San Francisco to Los Angeles at 760 miles an hour. Laughed off as science fiction, it is as of today an actual industry with three legitimate groups pushing it forward, including Hyperloop Technologies, the team in Harry Reid’s office. They emerge from “stealth” mode with this article, armed with an $8.5 million war chest and plans for a $80 million round later this year. “We have the team, the tools and the technology,” says Bam Brogan. “We can do this.” The 21st-century space race is on.”

This vacuum tube has been compared to sci-fi fantasies, but it is finally becoming a reality as Alex Davies wrote in his article, “Fortunately for futurists and people who enjoy picking apart complicated plans, an El Segundo, California-based startup has taken Musk up on his challenge to develop and build the Hyperloop.” This innovation will immediately change the dynamics of transportation. As the channels to utilize this form of transportation expand between major hubs, it will allow cargo to be shipped at high speeds throughout these hubs. This will allow a car made in Detroit to be shipped to its buyer in Los Angeles in a matter of just a few hours. This will also clear up some of the hated traffic on highways. Companies will be able to utilize the hyperloop for long distance shipping, for much faster delivery.

The major problem I see with implementing this technology (assuming first that some firm develops the technological and economic capabilities to build the hyperloop) is that truck drivers will oppose this with ferocity. They will see this as a threat to their jobs, and take action against it. This will happen in the form that taxi’s are trying to prevent car hailing apps, i.e. Uber and Lyft, by blocking traffic for hours to send their message. These type of actions will slow the implementation of the hyperloop, but will not stop it. This innovation also will not eliminate truck driver’s jobs because the hyperloop, being so expensive, will only make financial sense between major cities initially. There will still be a need for truck drivers to then make the delivery from these transportation hubs to their final destination. While this will certainly reduce the number of jobs, it will not eliminate entirely, this slow reduction of jobs should allow truck drivers some time to retrain for other jobs or develop other contingency plans.

The hyperloop will change entirely the container shipping industry by increasing the speed at which goods can be delivered to their final destination. It also has large-scale implications for human travel one day too, as Bruce Upbin wrote in his article, “The hyperloop, which Musk dubs “the fifth mode,” would be as fast as a plane, cheaper than a train and continuously available in any weather while emitting no carbon from the tailpipe. If people could get from Los Angeles to Las Vegas in 20 minutes, or New York to Philly in 10, cities become metro stops and borders evaporate, along with housing price imbalances and overcrowding.” While this may be a long ways in the future, it at least now has the chance to become a reality, rather than just a dream of some sci-fi author.

The Demise of Taxis

The rise of Uber to an over $40 billion valuation may seem absurd to most, but Uber is revolutionizing the way people travel within a city. Taxi drivers may scream and moan as much as they want, but Uber is here to stay. The taxi service business has been abysmal at best for years and needed an upgrade.   As Brad Stone mentions in his article Invasion of the Taxi Snatchers: Uber Leads an Industry’s Disruption:

San Francisco, like other urban centers, has long capped the number of taxi medallions, even as the population increased by 300,000 in the last 10 years. Dispatchers at the major cab companies didn’t seem to care about prompt customer service since they make money primarily by leasing their cars to drivers.”

This has caused companies that loan money to taxi drivers to buy a Medallion, such as Medallion Financial Corporation, to be losing share price drastically. As James Sterngold describes this in his WSJ article Uber’s Rise Has Taxi Lender Talking New Route, “But amid a taxi-business showdown that can look more like corporate mud wrestling than textbook market competition, Uber describes its service as a market disrupter and says the recent slide in medallion prices is just the beginning.” Investors in Medallion Financial beware, but this revolution is good for the overall consumer because it means that the supply of taxi like cars will more correctly meet the demand.

No longer will the Average Joe have to stand out on the street curb trying to hail down a taxi for half an hour in the pouring rain. No longer will Jane be late for her meeting because she couldn’t catch a taxi in time. With Uber’s revolutionary concept of its Surge pricing policies to encourage more drivers during high demand times. While these can run to 3x as expensive as a normal taxi trip, it is much more enjoyable than waiting an hour outside of Wrigley Field trying to find an open taxi after a Cubs win as this blogger has done! As Sterngold later mentions, “The taxi industry, including Medallion, and government rule makers “have propped up an artificial market for ages” by constructing “a castle of regulations,” says Corey Owens, head of global public policy at the San Francisco-based company. The result, he says, is that medallions have grown too expensive, making it tough for drivers to earn a living and stifling innovation.”’

This has to change, and Uber has its foot in the door trying to disrupt the ride sharing space, but it’s not going to be easy. As James Sterngold quotes Mr. Murstein, the president of Medallion Financial, “Owning a NYC. taxi medallion is like owning a piece of NYC.,” Mr. Murstein says. “I would never bet against them.” Well Mr. Murstein, it looks like NYC is about to change, for the better I might add!