Thursday, January 29, 2015

Networks Starting to Say Who Needs Cable

License fee negotiations between network and cable operator tends to be acrimonious these days.  Where once this relationship was more friend than enemy, today, that frenemy relationship has become a more business relationship.  As a result, each time a network is up for license fee renewal, the likely outcome includes a period of being dropped before returning to the line-up.

But networks are also watching the success of subscription services like Netflix, Hulu, and Amazon, and are pushing forward with more OTT deals outside the cable-network boundaries.  Last year, CBS and HBO unveiled each of their OTT subscription services.  And Showtime soon followed the HBO announcement.  WWE offered a subscription service and just this week announced that they have reached one million subscribers.  Today, we have Viacom announcing that their children's network, Nickelodeon, is also planning to sell an OTT, direct to consumer, subscription service too.  Its success could lead to other networks in its stable, MTV, VH1, and Comedy Central doing the same thing.  And not having to work with a middleman like the cable operator may become more appealing as consumers get tired of paying high cable rates.

Consumers wanted a la carte and now they are likely to get it.  Unfortunately, buy too many of these OTT subscription services and your entertainment costs will soon exceed the cost of your cable subscription. The bundling of cable networks may have driven the total costs too high, but it did offer something for everyone.  A la carte may seem cheaper but only if a small portion is all you desire.  Cable operators had fair warning to fix their programming strategy but it got out of control.  Its time to revisit and fix their offerings and pricing. Enable TV Everywhere to authenticated customers to create a better must have subscription.  Cable can fix this mess but the time is now. 

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