Despite the widespread conventional wisdom that consumers "must be" dropping a wide variety of communications and entertainment services, the most-recent DirecTV (News - Alert) Group Inc. financial results do not support the thesis. DirecTV added 301,000 net subscribers in the fourth quarter of 2008, the most net subs it has added in more than three years.

 

DirecTV also had what it called its "best year ever," as the company added 861,000 net new customers in 2008. Net subscriber additions of 301,000 in the fourth quarter were nearly 10 percent higher than last year's fourth quarter.

 

We'll have to see what the company reports for the first quarter of 2009.

 

It is probably worth noting, with significant attention focused on substitution of mobile and Internet video for traditional packaged multi-channel video, that there's lots of activity, money and attention focused on substitution of other services such as advertising.

 

And advertising already is at an inflection point: video isn't there yet. That's important for anybody who thinks they may have a chance to build a business based on changes in user behavior.

 

And inflection points are crucial. Move too early and you die. Move too late and you miss the opportunity.

 

The analogy: assume firms have a chance to establish themselves when water turns to ice or to steam. Since most major changes in established markets do not occur overnight, the analogy is a gradually rising or falling temperature. For a long time, it appears as though not much is happening.

 

But then the quantum change occurs. Almost instantly, water changes to gas or forms ice.

 

That's pretty much what happened to the U.S. newspaper business in early 2009: an accumulation of decades worth of changes produced a quantum change. Video is not there yet. Advertising is, in at least one segment of the business.

 

Since the tipping point has been reached, we should expect change at a faster rate than has been happening.