Last Friday’s news of Charter Communications shedding 122,000 video subscribers in Q1 has renewed lots of conversations about the solution to this “problem”, from both industry experts and consumers alike. On the consumer side, there is much talk about the way channels/networks are bundled into tiered packages and the friction this causes.
Many jump to the conclusion that we should simply be able to pay only for the networks (HGTV, CNN, FX, etc) that we want to actually watch, sometimes known as a la carte pricing. And while this seems simple and intuitive, from a business model standpoint this is wildly complicated (and I’m not going to get into that here).
But what about “Skinny Bundles”?
There are some “skinny bundle” solutions out there like Sling TV, Direct TV Now, PlayStation Vue, etc that are trying to fill the gap. This may be an acceptable solution for some, but they are still just more of the same problem at a potentially lower price point. The packages may be smaller, or have more package tiers, but it still isn’t menu of individual channels that I get to pick from myself and many times people are subscribing to different skinny bundles from different providers. This sounds more complicated, not simpler.
And while the judge is in on the AT&T and Time Warner merger moving forward, the jury is still out as to if this will mean smaller, cheaper bundles. There is much speculation that it will actually go the other way.
Plus, how frustrating would it be to purchase a specific channel because of only one show you want to watch, only to have that network cancel it and for the show to be picked up by a network you aren’t paying for? This is starting to happen…
Unbundling channels is not the answer.
Disruption Theory as articulated in The Innovator’s Dilemma by Clay Christensen discusses the idea of the overserved customer. In Alex Danco’s Emergent Layers series, he takes this one step further in that when a customer is both over served (existing market offerings exceed their needs) and underserved (existing market offerings are not fulfilling the fundamental need), the market is ripe for a new model.
Let’s apply this to pay tv:
The core argument for unbundling is “why would I pay for channels I don’t watch?”. But let’s extend this logic one step forward in asking: “why would I want to pay for shows I don’t watch?”. While many people say they really want just a few channels, when asked why those channels they usually reference specific shows on those channels. Both the cable provider and the network are overserving us with content we don’t want or need, and yet we are paying for it (albeit begrudgingly).
At the same time, how many times have you heard or said to your partner, “there is nothing on tv”. By all accounts though, there is lots of good original content out there being bought up by Netflix, HBO, Hulu, Amazon, etc. It may just be that it isn’t the genre or story lines that you are looking for, or on a service that you subscribe to. Here we are underserved in our basic need to just find something good to watch, by our own definition of course.
Being both over and underserved plus the ability for shows to move between networks makes irrelevant the “solution” of unbundling channels, and upends the entire idea of what a network itself is too. So, there must be a better model…
It’s all about the Content
The value that cable providers and networks offered to the consumer was the discovery, aggregation, and distribution of content. In today’s world it has never been easier to create and distribute engaging, quality content with high production values.
This then leads to the question of what will the model look like in the future. My hypothesis is a new type of platform will emerge where customers will be able to 1.) “Invest” in the content they want to be made in the first place (think Kickstarter) and 2.) Continue to fund existing shows they want to see new episodes / seasons of (think iTunes).
I imagine being able to scroll through potential new shows that are in need of funding and let me decide, with my money, which ones I think should be made. This will take the form of reading early scripts, seeing concept storyboards, or seeing well produced shorts in our trailer-obsessed culture. The ones that achieve their funding requirements, those ones will get made. The market and consumers will decide directly removing all of the layers between. And once shows are made, they will fall into an iTunes type discovery, distribution, revenue type model.
Much of my retail and marketing experience tells me that the content ideation and creation will get much closer to the consumer, if not directly driven by them.
In any regard, I genuinely hope to see some innovation in this space soon.
brad mauk 