The Television Industry is Its Own Worst Enemy
Current Strategies Risk Creating an Even Larger Problem
Traditional television has always been a big deal. Since its inception, and even into the internet age, for writers and actors, personalities of all kinds, even consumer products, appearing within millions of homes via television was a sure sign of going mainstream.
You’d think that would mean that the television business could be pretty cushy, and for decades it was.
Newspaper Parallel
The first wave of disruption to hit television shares its roots with fate of the newspaper industry.
As the internet became more integrated into our lives, television networks began putting their content online. Some simply made episodes available on their own websites. Others struck deals with Netflix and other third-party VOD libraries, giving old content new life and cashing a check in the process.
In isolation, these seemed like good ideas. But the ultimate results bear an eerie similarity to that which befell the now-languishing newspaper business.
That online content was now both cheaper to access and more convenient than a traditional television subscription.
Just as there was no more reason to pay to have an unwieldy mass of paper delivered every morning when you could read the news online, paying hundreds of dollars a month to some of the least popular companies in America for television service suddenly became a tough sell.
The exodus from cable and satellite television had begun. The numbers may have been small at first, easy to shrug off, but they’ve only grown since, and they’re not slowing down.
SVOD Cannibalization
When Reed Hastings first showed up on the scene, offering cash for content, it seemed like free money for the TV networks. Each of them had decades worth of popular content, but a linear television channel could only accommodate a tiny fraction of that in its schedule, only the latest and greatest.
But all that content that no longer made the cut for network television, reruns of Friends or The Office, were gold mines for the SVOD services, which grew rapidly, both in terms of subscribers and popularity.
As the cord-cutting trend picked up steam, suddenly Netflix, Hulu, and Amazon Prime seemed like reasonable substitutes for cable TV.
The networks had handed weapons to the companies that were now increasingly their rivals. They’d effectively upended their own apple cart.
Worse yet, they quickly discovered that they couldn’t put that toothpaste back in the tube. The pay-TV exodus is in full swing. Attempts to stymie it have failed.
The writing is on the wall for the incumbent media industry: get ready for a post-cable world. One where Netflix and Amazon are the natives, and the clock is ticking for old media to shift gears.
The Next Great Self-Inflicted Disaster
Here we are in 2019, and the big media giants are finally gearing up to take the fight to their Silicon Valley rivals.
The past year has seen the first salvos in the coming war. Major announcements have included huge volumes of content being yanked from their long-time streaming homes, and high profile launches of new first-party SVOD libraries from Disney and (now AT&T-owned) Time Warner, with others expected to follow shortly.
Consumers of the future will get their television online, not in a package from a cable or satellite company. That much is now a given.
But the traditional media industry’s determination to reclaim the piece of the revenue pie that they once gave away will very likely shrink the pie for everyone.
Netflix, Hulu, and Amazon served as proto-aggregators. Each one held a wide variety of content, originating from multiple networks and studios.
Now, what is effectively the same volume of content, is being split and spread across more different platforms, rather than just three.
For the networks’ plans to pan out, a Netflix subscriber would have to convert to a Netflix, Disney Plus, HBO Max, Comcast and CBS/Viacom subscriber, etc.
Being Honest about the Reality
Frankly, this isn’t going to happen. A lot of those customers are going to fall out.
Some will have to make economic choices. If they were paying for one service, they may now choose one or two, rather than pay for all of them.
Some will be put off by the degraded user experience, with their content now found in too many different apps to keep track of. They may simply do without.
Some might turn to piracy, which is unfortunately being incentivized rather than deterred by current strategies.
Others will bounce between free trials, binge a season of their favorite shows on one network, and move on to the next depending on where the deals are, but never providing a reliable revenue stream that a Netflix subscriber of the past few years might have.
Urgency for a Solution
The Netflix problem was one that was created in slow-motion. SVOD grew over years, and essentially snuck up on the incumbent media giants.
This new problem is one that will hit consumers hard, and in relatively short order. And when that happens, it could just as quickly boomerang and create an urgent problem for networks.
Those networks have not only been forced to invest in their own SVOD products, they’ll be going without the revenue once generated from licensing that content.
If the consumers don’t show up, or show up in much lower numbers than expected, or churn through at much higher rates, the whole strategy goes pear-shaped in a hurry.
