Epix CEO: cord cutting will force the TV industry to innovate

Been there, done that: Ask Epix CEO Mark Greenberg about cord cutting, and he is going to tell you that it feels like deja vu to him. Consumers who ditch cable and look for other ways to get their TV fix? That’s exactly what happened in the early 1990s, when satellite TV providers like DirecTV (S DTV) and then Dish (S DISH) came out of nowhere only to acquire 20 million customers within a few years.

Here’s how Greenberg put it during a keynote at this week’s Next TV Summit in San Francisco:

“Some in the media business call this cord cutting. But three decades ago, we had a different name for this in the industry. We called it competition.”

I had a chance to sit down with Greenberg after his keynote, and he elaborated a bit more on those thoughts. Before founding the movie-focused network Epix, which is owned by three of the major studios, Greenberg worked at both HBO and Showtime, and he still vividly remembers the ascent of satellite TV.

Back in those days, cable providers pleaded with the premium cable networks not to sell their feeds to satellite, even going as far as offering them more money for exclusivity. HBO and Showtime decided to do business with satellite anyway, and consumers gained choice, HD video and cheaper options.

Young people can’t afford $100 cable bills

Greenberg seems the same forces at work right now, and calls cord cutting and the internet simply the “fourth retail option” for consumers, some of whom are willing to string their own bundles with a variety of online services. He sees this driven by cost as well as convenience. Especially since a lot of young people simply can’t afford the $100 cable bill, he argued.

“This younger group is challenged by debt from student loans, not finding any jobs,” Greenberg said. Whether these consumers would ever subscribe once they get a stable job remained very much an open question, he added. “That’s gonna be the moment of truth.”

The industry will have to adapt and innovate to win back some of those consumers. Authenticated online viewing, coined “TV Everywhere” by the industry, needs to be improved, argued Greenberg, saying that signing up for Netflix is much easier than authenticating your online TV services. “Netflix is a great success story,” he said, adding: “If (operators) had delivered on TV authentication, maybe Netflix wouldn’t be there.”

Small networks may not survive

But the offerings themselves may have to change as well. “The average consumer watches about 14 channels,” Greenberg told me. At the same time, just killing the bundle may not work either, because costs for individual networks would go up as fewer people subscribe to them. The answer could potentially lie in smaller and smarter bundles, combined with new user interfaces, integration of social networks and better content curation. One example for curation done right is Pandora, Greenberg said, quipping:

“Pandora creates a custom channel for you. TV operators don’t even let you pick a custom time for your installation.”

Some of these features could be delivered by internet-based TV services like the ones Intel (s INTC) and Sony (S SNE) are working on. Greenberg acknowledged that Epix is talking to some of the companies who are trying to take on cable with online TV subscriptions, but declined to go into details. Internet-based TV operators “will exist,” he said, and some could succeed through better personalization.

And how about the traditional players? Not everyone may be equipped to embrace change, he admitted. The operator landscape is ripe for consolidation, and smaller and more flexible bundles may make it harder for some cable networks to make the economics of carriage agreements work for them. “The smaller networks may not survive,” Greenberg said.