The US national Cable Show has taken place in Boston over the weekend with all the heavyweight players in agreement at how strong their industry is, but each aware at the growing influence of online TV distribution. Considering that the biggest ISP’s in the US are also those that control the cable TV, this only strengthens their business.
Deadline have today published a list of interesting comments provided by those in attendance. Each of the comments are worth paying attention to as they really highlight whether the executives actually ‘get it’, or whether they’ll flail about as the industry changes around them.
The exec that caught my eye was Time Warner Cable CEO Glenn Britt, who said:
- “There’s no such thing as a TV anymore. There’s a video display device.”
- “I see Netflix as another programmer. But clearly if there is something that makes consumers not want to buy the big package (of programming) that we’re selling then that’s a threat to all of us.”
- “There clearly is a growing underclass of consumers that can’t afford [cable TV] and they want it. It would behoove all of us to have smaller packages… The economics make it difficult, but it would serve us well to worry about that group.”
I don’t agree that there is “no such thing as TV anymore”. Is there such a thing as TV still and will there continue to be? Sure. It’s still television, it’s just delivered to the home and consumed in a different fashion. Television is more than delivery platforms and ad-buys.
Where Britt raises a valuable point is the discussion of consumer economics that now surrounds pay television. Services like Netflix (which for US $8 a month, subscribers can access an extensive library of movies, TV, documentaries, and other similar programing) and Hulu Plus are providing cheap access of content to consumers. While the content is by no means as expansive as a cable TV subscription may offer, the amount of content offered for $8 a month against $120 per month suddenly makes cable TV look quite poor in comparison.
The way that the cable television business model is structured makes it difficult to embrace low-cost small package offerings. The strength of cable is the wealth of channels offering all sorts of niche content. If consumers are able to select their channels of choice a la carte, a great number of these channels will no longer have the viewer numbers to support their continued existence (the Australian arts channel Ovation is a good, local example of how niche broadcasters have trouble surviving with low subscriber numbers when offered a la carte).
Connected TV services like Netflix and Hulu Plus are revolutionising the subscription television business. Massive libraries of content may no longer be the future, but rather smaller, more targeted services may well be what viewers are subscribing to in the very near future. Modern day cable companies will have to shift their business models substantially in order to compete.
Locally, Foxtel have already signaled plans to shift their service from a mass audience broadcaster to a cloud-driven on-demand content provider. But, will they be able to deliver the smaller packages that are driving the industry growth?