There are many ways, each with some cost to some players, to slow the inevitable decline of the MVPD “ecosystem” — which has been immensely profitable, particularly for industry leadership.
Some technological erosion is inevitable. After all, the industry itself flourished because of technological innovation.
For the past few years, though, there has been insufficient effort to stem the erosion. Following are several suggestions, ranging from practical to impractical, free to expensive. With subscribers selling for $5,000 to $6,000 a pop, it’s an investment in “retention.”
Perhaps, leadership was “distracted”: Comcast was fighting for its finally-aborted Time Warner Cable acquisition; TWC, in turn, was tied up by the strategic attention of Charter; DirecTV and AT&T finally worked out their merger; Time Warner Inc. was fending off Rupert Murdoch’s unsolicited takeover, while Rupert was passing the mantle to his kids; Viacom was focused on Sumner Redstone’s sick room rather than its MSO problems; Dish Network had strategies du jour; and The Walt Disney Co. was building multibillion-dollar cruise boats and Chinese parks while brilliantly absorbing the major movie/consumer “brands” of Pixar, Marvel, Lucasfilm, etc.
Who, among industry leaders, led the fight to: lower subscriber costs, advocate the “bundle,” improve the experience and — directly or indirectly — rebut the public-relations tsunami of Netflix’s Reed Hastings? Points to consider:
► Are any programmers, or distributors, willing to make less now to keep high costs from changing the system?
► Are “skinny” bundles really the solution? For anybody?
► Anachronistic equipment charges: Perhaps profitable or not fully amortized, but customers pay $10 to $40 per month for “dumb” equipment in a generation of “cool” gadgets. “TV everywhere” was a start, but which MVPD is really offering multiple-set access without high extra charges?
► High prices for programming: Sports aside, monthly fees are relatively minimal, but those programmers (Discovery, A&E, Viacom, Hallmark, Scripps, AMC, etc.) fail to “educate” the audience about how inexpensive they really are.
► Sports costs: Over many long years of knowing — and admiring — Disney chairman and CEO Bob Iger, I’ve never seen him as uncomfortable as on CNBC justifying ESPN. The full ESPN package can cost cable/ satellite subscribers more than $8 per month.
Add charges for RSNs (in New York: MSG, SNY, MSG Plus, YES, etc.) and other all sports networks (CBS Sports Network, NBCSN, Fox Sports One, Tennis Channel, MLB Network, NFL Network, Golf Channel, etc.). Add retransmission fees charged by CBS, Fox, NBC and ABC (largely for ESPN events); plus Turner’s higher cable fees.
Conceivably, subscribers to the “full bundle” are paying $30-40 monthly just for sports — which some subscribers never watch.
► Kids’ programming: Ditto, fees charged for children’s/adolescent programming (Nickelodeon, Cartoon Network, MTV, Disney, etc.). Unwatched in (many) homes without kids, it alienates many customers.
► Program sameness: The ecosystem has been highly profitable for most players, in part because of low-cost, “nonfiction/reality” programming — but also leading to a dreary sameness among 10 to 20 channels.
Has the industry made its case for the low-cost and, occasionally, high-quality enrichment value of many reality programs vs. those only exploitative?
► “Compulsory” programming: It is clear some subscribers will not live without their favorite sports teams or the NFL? Some are sworn to Fox News Channel. Some to Game of Thrones.
Though much of its programming is really “attractive,” how much is really “compulsory” — on A&E, Discovery, USA Network, AMC, MTV, FX, TNT, et. al.? With a plethora of reruns and children’s programming available OTT, is America’s economically-pinched middle class being encouraged to “cut the cord?” Who is leading the fight for the “good stuff ” there now?
And who is inventing programming that just “can’t be missed”? (Even The Daily Show With Jon Stewart was available on the Internet when Suddenlink’s systems dropped Viacom.)
► Commercials: All subscribers now have record/ playback devices, which encourages commercial skipping. Premium linear networks and new OTT program sources are generally commercial-free. So, as TV advertising thinned out and commoditized, the industry response was to jam even more commercials into programming. Is that leadership?
► Public relations, in general: In addition to Netflix’s brilliant initiatives, other deep-pocketed “digital” players (Amazon, Apple, Microsoft, Google, Facebook, et. al.) now compete with even more programming and even more, often specialized, advertising.
Have the threatened “traditional” media companies responded with sufficient marketing and public relations?
► Marketing costs: Despite all the “certainty” about OTT, there has been very little analysis of the extraordinary marketing costs required to introduce new services, skinny bundles, even individual programs or movies. Most would-be “consolidators” have not yet been market-tested.
Conversely, the added expense of retaining an MPVD subscriber seems very efficient vs. losing one worth $5,000 to $6,000.
Perhaps technological — and social — change is rapidly eroding the previously secure ecosystem. Fifty years ago, Marshall McLuhan taught that “distribution determined content.” Lazy thinkers believed the quasi-monopoly made “content king.” The day of reckoning has arrived.
But, it seems, the traditional “leadership” has given up without a real fight.
Edward Bleier is the retired president of Warner Bros. Domestic Pay TV, Cable & Network Features, now serving as a board member of three media companies.
