Monday, October 8, 2012

Online Channels Growing To Compete With Cable

Can the rise of online video channels disrupt the current model of cable TV or can both live peacefully together?  Certainly broadcast survived the growth of cable although eventually broadcast networks had to buy their cable counterparts.  With the growth in online video, consumers may be excited to have more choice or they may decide that they don't need cable TV and will continue to cut the cord to their cable subscription.

The disruptive change is coming from Google and their video arm, You Tube.  "Acting more like a TV network every day, YouTube says it will pay money to professional producers of more than 60 new shows it is adding through its YouTube Originals program in the UK, France, Germany and the US."  And You Tube is spending tons of cash to support these endeavors to create original content on their online distribution platform. And while the content quality will improve with professionally produced video, the other side of You Tube, consumer generated videos, may just be relegated to lower placement or worse, lose their place on the platform.

As these original You Tube programs become long form, 30 minutes or longer, they will truly compete head to head with cable television viewing.  With only so many hours in the day to watch, attention to cable will be diverted to online just as, years ago, cable TV diverted attention from broadcast channels to cable programming.  How will the networks respond?  Most likely, an even more truly integrated TV Everywhere approach to assure that all linear content is accessible across multiple devices, both inside AND outside the home.  Today, some cable operators only offer access to mobile devices inside their home.  Networks and Cable Operators may also have to consider buying up these upstarts in order to have more contact in the space. 

As online video takes root, the likely end scenario will be that the big broadcast networks will have the largest audiences as they will have a true TV Everywhere model. The best online video will most likely be behind a pay window and the cable model, if flexible to more a la carte, build your own line-up of channels type of model, could be most customer friendly and successful.  The content model frankly cannot live on advertising revenue alone.  The need for a second stream of revenue, like a subscription service, is necessary to pay the bills.  Without it, the online video model cannot continue to attract the top talent; eventually they all want to be paid more. 

No comments:

Post a Comment