The Great Winnowing: How OTT Will Crush Unloved Pay TV Networks
If you still have pay TV, look through your channel lineup and see what you’re paying for. Look deeply.
Before I trimmed my service, I had Destination America, CCTV News, and Up on my roster — as well as dozens of other channels I’ve either never heard of or watched. Even with my reduced plan I’m still paying for Ion and BYU TV, among others — channels I’ll never tune in.
If I were to completely cut the cord, how many of those channels would I want in a skinny bundle? Zero. You likely feel the same. In 10 years, when cord-cutting and -trimming have taken a more sizable bite out of the pay TV industry, how many of those less-loved channels will still be in existence?
To get another opinion on this, I spoke to Greg Ireland, research director for multiscreen video at IDC, and a reliable expert in all things streaming. There are bound to be losers, he agreed. But first he wanted to talk about who wins in this streaming future.
Just because households will get fewer channels, Ireland points out, doesn’t mean they’ll pay less overall. I agree: I didn’t consider trimming my satellite bill until the price of that plus subscription services seemed too much. So I cut the pay TV lineup to balance it out. I’m paying the same amount per month and getting fewer channels.
Networks like AMC, FX, and TNT feel more pressure now to create premium original content, Ireland says. They’re competing not just for views, but to build brands that resonate with viewers. They need to make sure they’re must-haves when cord-cutters go shopping for a skinny bundle.
But being an A-list network isn’t the only way to win in the future.
“I think the other set of winners could potentially be even those without compelling content but that have an attractive per subscriber price point,” Ireland says. “The magic of a skinny bundle is its intent is to have both a low price point and a large enough collection of channels that it seems worth it to a subscriber, which then means if you’re talking about YouTube TV at a $35 per month price point, you need some compelling content in there. But then there’s also, ‘How [do] we just fill out this lineup of channels so that it looks like a good deal for $35?’”
Those channels are the roughage in the TV diet. They offer bulk and fiber so the consumer feels full. But who’s not going to make even this B-list cut-off?
Channels like Oxygen, which lacks compelling content, could be in trouble, Ireland notes — although Oprah’s partial ownership could save it. Second-tier siblings of popular channels, like Nat Geo Wild and Disney Junior, could also see hard times.
Some channels will inevitably fade away, but look for channel owners to figure out a way to protect their revenue streams.
“If the old model breaks down and NBC or Disney can’t make money across all 10 of the channels that they have that used to get universal carriage, now they have to make all of that money off of two or three channels,” Ireland says. “Well, then those two or three channels are still going to cost you the same amount of money. At the end of the day, the economics aren’t going to work that you can continue to get more for less.”
No doubt the only people saving money in this future will be those who cut off TV services entirely or just stick to one service and never add to it. That’s not going to be me or my household, and I imagine most of us will cobble together our own personal bundles geared to our tastes. Even though it’ll cost the same or more, 100 channels I like still feels like a better deal than 400 I have no interest in.
[This article appears in the September 2017 issue of Streaming Media Magazine as "The Great Winnowing: How OTT Will Crush Pay TV Networks."]
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