Thursday, January 9, 2014

Cable Network Bypassing Cable Operators For OTT

While Comcast says it saw a small increase in basic subscription, Time Warner Cable reported a Q4 drop of 250 million households.  Cord cutting might be slowing down, but no one doubts that it is still occurring in households tired of paying for channels they don't want.  That hurts new and independent cable networks unable to gain any foothold on a cable line-up.  And for the WWE, a decision it seems to bypass the cable operator to offer its brand new linear network as an ala carte service to consumers through streaming platforms.

"The WWE Network launches Feb. 24 as a streaming service for $9.99 per month with a six-month commitment and will include all 12 pay-per-view events."  Cable operators will certainly not like competition for eyeballs to Summer Slam and other monthly event based programming and could retaliate.  Cable networks like USA that carry weekly WWE programming could also decide to stop airing these shows although that also seems unlikely.  So the WWE sees tremendous upside in offering a streaming linear network to augment its media empire and ultimately reach the younger demo that has been embracing streaming video content.  Will they see the value in a $10 monthly service for just one channel?  Hardcore fans that also buy multiple PPV fights will find this to be a better deal.  I also wouldn't be surprised that it could be a better financial deal for WWE to stream rather than split revenue with each of the cable operators for its monthly fights.    

For WWE, the offer of the PPV fights included with the streaming linear subscription model could just be the tactic that assures that they surpass their breakeven level.  And other programmers who have been unable to grow their subscriber base through the cable operator model may look toward the WWE model to help create their own winning streaming linear and on demand subscription service, too.