Pages

Thursday, March 5, 2015

Content Networks Chasing The Cord Cutters

Cable operators and content networks have always had a difficult relationship as buyer and seller.  In the early days of cable, their relationship was more harmonious with launches coupled with marketing activities to assure that subscribers saw value from the network and networks built awareness and hopefully ratings.  But the proliferation of cable networks, a loss of brand as niche networks began looking more and more like UHF channels, and a price only mentality have turned these negotiations bitter and untrustworthy.  The result has been broadcast and cable network drops, followed by ads telling subscribers how horrible the other side is behaving, and then finally a relaunch.

Consumers are changing too.  No longer do they seek content simply from a cable operator; now, they can watch TV shows and movies via a broadband connection.  And while broadband subscription rises, cable subscription is dropping.  Cord cutting is a fact.  Recognizing that the cable operator is not the only distribution platform anymore, content networks are constructing deals on OTT platforms.  Most recently, it was announced that AMC, IFC, and Epix are joining the Sling TV digital platform.  For as little as $20 a month, subscribers can get these nets as well as ESPN, HGTV, TNT and a few others.  Less networks than a cable operator subscription package but at a lower cost to the consumer.

HBO has also announced that it too will offer its network without the requirement of a cable operator.  Tentatively titled HBO Now, it helps them to compete in the same new world that Netflix, Amazon Prime, and others compete in.  With cable nets building alternative avenues for access, the pressure for more cord cutting will only continue to mount.  And as negotiations with cable nets lead to drops on cable systems, the likelihood that these networks will relaunch may become a distant memory.  Networks can simply advertise an alternative way to get the networks they love without the cable operator as the middleman.

Cable operators have done little to compete in this changing media environment.  TV Everywhere is not available to subscribers for all its nets; rather only certain networks offer authenticated carriage, some only inside the home, and with no aggregated way to easily search across a line-up.  Cable boxes remain clunky and hard to navigate unlike IP devices.  New packaging is not being created to drive down the subscriber price point to enable stronger retention.  Rather, prices continue to go up to keep revenues stable.

What does the future hold?  I see cable operators dropping cable networks that don't perform.  Smaller packages of cable networks but at lower price points.  I see operators needing to invest in new generations of cable boxes, embracing the TiVo type boxes that access both cable and internet content and bring it to the TV screen.  And I see the emergence of a la carte pricing where a home can buy a particular network through their cable box for access across all their devices.