Content Insider #331 - Power of Choice
Breaking Content Barriers Can Be Good, Then Again...
By Miles Weston
"Whether you end up in Heaven or Hell isn't God's plan, it's your own. You just have to remember what it is." - Meacham, "Cowboys & Aliens," Universal, 2011
"You have this incredible confluence of a medium coming into its own just as the technology for that medium is drastically shifting. Studios and networks who ignore either shift will be left behind," Kevin Spacey, star of House of Cards, recently wrote regarding the fading importance of cable/satellite, compared to OTT (over-the-top) streaming content.
You might forgive him for being a little over the top (we know, bad pun) in saying cable was going to become simply a dumb pipe provider, rather than the gatekeeper of entertainment/news.
With an Emmy and a major audience draw for Netflix, he may have something.
The win is a powerful sign of an industry in transition, retooling itself to produce and distribute content that is streamed, not broadcast.
The beginning of the end for cable's linear, scheduled TV approach comes when the Internet players have too many subscribers for the content rights holders to ignore.
As Pat Dolan said, "So, I'm gonna ask you one last time."
In the early days of the industry, streaming video services focused mostly on volume. But with the growing acceptance/use of smart TVs and streaming media devices such as those available from Apple, NanoTech and Sony, OTT services are finding a ready-to-go audience that doesn't rush to their TV set because of the cable schedule.
The phase where everything was to reach a critical mass of viewers and subscribers has passed.
OTT isn't small anymore.
Netflix has 100 million streaming service subscribers (30M in the U.S.), while even the largest cable company has only 22 million; and the number of households cutting the cable continues to rise.
Negative Progress - As people become more accustomed to going to the Web first to get their news and later to catch up on shows and entertainment, it doesn't take them long to realize they are paying for a bundled cable service that they use less and less. And as more VOD content is available over-the-top, it's tougher and tougher for cable companies to find new customers and retain long-term viewers.
All of the pay-per-view services have a combined total of more than 95M subscribers and the number of people who stream their video from YouTube, UltraFlix and other channels is growing very aggressively.
Nielsen reported the number has more than tripled in the past two years.
Ella looked over the scene and said, "If it's all the same, I'd like to ride along, too."
To put it another way, Internet TV is evolving faster and growing faster than cable did in its heyday.
Despite the growing interest in IPTV and OTT viewing, TV's migration to 100 percent Internet will be an evolution, not a revolution.
Ella screamed, "I told you not to look into the light."
Face it, content owners were terrified at what Apple did to the music industry in the '90s and what Amazon did to the book publishing industry in the 2000s.
They own the TV shows. Everything else is just distribution.
They have restricted the ways TV content can be distributed and consumed, allowing cable/satellite services to charge what the traffic will bear (on the average $86 per month according to NPD and projected a $200 per month bill by 2020).
The issue has been addressed by a growing number of streaming media device manufacturers such as NanoTech that make it fast, easy and economical for consumers to use their devices with virtually all of the new UHD TV and HD sets while still providing ruggedized content protection.
Easy Streaming - New devices that are designed first as a streaming video device are becoming increasingly popular--especially as people begin to move to 4K UHD TV sets. In addition, content secure devices like the one above stream radio content, provide access to hundreds of online video services such as YouTube and even deliver top-notch game-playing action with Google Play and freemium game sites.
The safe, secure solution meets the stream-it-anytime needs of the consumer and the ROI (return on investment) needs of the content owners and their investors.
Taking the alternative route to viewers, content owners/distributors are finding that online, on-demand TV provides new opportunities to repurpose their free (advertiser supported) material to an audience that chooses to watch their favorite TV shows on their own schedule.
That means extra boxes like your TiVo or Digital Video Recorder (DVR) will be replaced by the new open video player because you'll be able to use the new device's video channel service and the content will be there when you want it ... BAM!!
That's okay with me because I could never program the **** DVR anyway.
It was originally thought that viewers would "revolt" over the fast-forward capability being disabled for the free OTT VOD; but consumers have determined that being able to enjoy premium content with viewing flexibility, commercial viewing is a fair price to pay.
Advertisers find streaming Internet content inviting because it is easy to quantify the audience. Services like Nielsen can provide advertisers with precise audience numbers and viewer demographics.
It's Out There - Gen X and Gen C individuals who have barely (or never) known that the content they wanted to view wasn't always available immediately, have been the first adopters of OTT entertainment and news viewing and have had an influence on older generations.
As a result, content owners will abandon their bundled network/cable agreements and begin streaming their shows on their own websites or through video services to OTT streaming video players like Roku and Nuvola.
It will be difficult for satellite and cable companies to retain existing bundle customer and entice new ones when people can get the same content on the web à la carte.
Some folks like to rub their hands together and say they'll be able to cut the cord and "do in" the cable (and satellite) guy.
Hate to burst your bubble, but they will own all that fiber in the ground. They just won't be buying/bundling/distributing.
Traditionally, production companies assembled the writing, production and acting bundles and sold them to networks or cable companies. But when streaming-only people like Netflix, Hulu and Amazon entered the content space, all of that changed.
The result has been House of Cards, Weeds, Orange is the New Black and other show ideas that are bypassing the broadcast, pay channel and cable bundlers and changing the way deals are done ... permanently.
Very quickly, content owners will be able to see around the exclusivity agreements they were forced to sign with pay TV operators and offer their entertainment on a broader set of distribution options that are right for the consumer/viewer.
On-demand TV will make the closed-network, scheduled TV irrelevant.
People will be able to pick and choose when they watch their favorite TV shows. The rigid network/cable programming schedule will become nothing but a memory.
When it takes place, telco, satellite and cable companies will evolve into infrastructure - dumb pipe broadband network - service firms.
Content owners will pay to send you the news/entertainment; you'll pay to receive/enjoy it.
It will be different but the same.
Or, as Woodrow Dolarhyde hollered, "They're coming back! They're coming back!"