This is a very well written and thought out argument. However, I would like to propose an alternative. I cut the cable years ago. I pay for internet service to the cable company (something I hate to do since they suck so much - I would pay more for a better service - but I digress). I currently pay for netflix that gives me most of the historical content that I want to watch. I then pay Apple when I want to watch something more current that is available through itunes. I also have a digital antenna to get live TV for news and the ocasional sports game.
My approach cost me on average about $20 per month ($8 for Netflix and 2 or 3 movies through iTunes). For me I might pay a few extra dollars to get the local channels through ATV to make the quality of the feed more consistent, but that's about it.
I don't watch hours of conent every month so any kind of bundle just won't work for my use case. Even the HBO deal seems off when it cost more than netflix or hulu. It really should be more about the content than the channel. HBO could partner with Netflix or Hulu and probably reach a wider audience. Netflix/Hulu would probably add a dollar to those that want access to the additional content and that would be about it.
So in summary, my approach would be to keep the aggregator model of Hulu/Netflix for the older content at a low cost ($9.99 would be the max) and then a la cart content through itunes newer content. A small additional fee for live streams for those that want it would also make sense.
For those that spend a lot of time in front of a TV watching content (go out and get some exercise) this model could be expensive if they are watching current content as you have said. Maybe bundles work for them. But for folks like me that only watch current content on ocassion, the aggregator + a la cart is a way better model.
That's fine but again, it's an
individual experience/view/situation that won't work in a masses adoption. It works for you because you are fine with the compromises vs. a cableTV/Satt subscription. Not everyone will be satisfied with "most of the historical content I want to watch" so that they too can get most of what they want via Netflix at $8. For example, they'll want live sports. And/or they'll want to be able to talk about brand new original programming they saw last night on mainstream cable channels that is not going to be appear on Netflix for days or months if ever (you'll be locked out of that conversation). Getting to talk about the NCAA basketball tournament in May because of delays for cheaper distribution options almost misses the entire point of "March Madness". I doubt we'd ever get to hear anyone pumped about "May Madness" (broadcast delayed March Madness for lower-cost distribution channels).
Perhaps an extreme analogy: homeless guy pays $0 to the greedy man. Because he:
-can use the light of the sun, he doesn't need to pay the electric company.
-can use rain and public restrooms, he doesn't need the water bill,
-can find somewhat insulated crevices/caves or public shelter when he needs to be warmer, he doesn't need a home or apartment,
-can get by wearing the same clothes every day without failing some kind of social expectations, he doesn't need a wardrobe,
-doesn't have a job or other local travel responsibilities, he doesn't need a car,
-doesn't own a house or car or possessions, he doesn't need home & car insurance,
-can get enough (tax free) income begging for it (and through public shelters), he can get enough food to stay alive
Etc.
So homeless guy through choices & personal, quality-of-life sacrifices (and sometimes just bad luck), can stick it to the greedy Elec company, greedy Water company, greedy Landlords or Banks, greedy Clothing retailers, greedy Car Dealerships, greedy Insurance companies, greedy IRS and greedy Food companies by living the homeless life. If there was a "LifeRumors.com" and he could post to it, he could get on there, gripe about any or all of these "greedy" crooked companies and tout how he is beating any and all of them by choosing to do things his way. But even there, if the masses decide his was the better way and copied him, eventually, the food shelter wouldn't have food for him anymore, the begging wouldn't give him his income, the public restroom will run out of TP and so on.
The cord cutting works now because most people haven't done it. Netflix will not be able to stay at $8. Hulu won't stay at it's price either. Both are on borrowed time at those prices (meaning expect price increases or, more likely, tiered pricing). Over-the-air free might go too if the networks find they can get $6/month each and still run the commercials and be able to turn off the (expensive) towers. If an IP version of each can be compatible with local affiliate arrangements (programming and commercial sales), going from free* to $6 will simply be a smart, lucrative move for them.
Those who have it, enjoy it. Those who go soon, enjoy it. But when the masses try to go there, it will be over as you know it. Most of the savings revolves around assumptions that broadband pricing will remain static (it won't), that Netflix & Hulu can stay at around $8 forever (they can't), etc and that Apple can pile on as a new middleman but we'll somehow get everything else we can't get from Netflix for dirt cheap (like Netflix). If "everything else" could be delivered dirt cheap, it would already be on Netflix or Hulu. Instead, Netflix is losing desirable content like the whole Starz bundle when contracts come up for renewal and the content owners want a better deal for their content. Expect more of the same as other content contracts come up for renewal.
TV first came out it gave people a simple way to get streaming content onto their TV, but now everything from video game consoles to Blu-ray players to a variety of set top boxes to the TVs themselves can easily stream content. The hardware and the services caught up to Apple and passed right by them with regards to streaming video content.
