Cord cutting may be the future but Google Fiber unfortunately still has to deal with the present, and that means it has to shell out cash to TV studios for the rights to deliver their shows over its pay TV service. Per The Washington Post, Google Fiber boss Milo Medin said on Monday that paying for TV programs is the biggest impediment to Google Fiber spreading further, especially because studios charge significantly more for the rights to offer their shows than they charge big cable companies like Comcast and Time Warner Cable.
“We operate at a very significant difference than incumbents we compete against,” said Medin. “We may be paying in some markets double what incumbents are paying for the same programming.”
Although cable companies get the brunt of the blame for the fact that cable TV prices have been rising at three times the rate of inflation, the truth is that the TV studios are the primary culprits for these major price increases thanks to the increased licensing fees they charge.
Although the rise of Netflix, Hulu and Amazon Prime Instant has helped chip away at this old business model, it will likely be several more years before we just start watching all of our shows over the Internet. After all, the current business model has been very good for TV studios and they won’t let go of it until they’re absolutely forced to do so.