Industry Needs to Offer Entertainment Choice
Content Insider #908 – Home Hunt
By Andy Marken – andy@markencom.com
Since the discovery of their existence, they have been regarded with fear, suspicion, and often hatred. Across the planet, debate rages. Sharing the world has never been humanity’s defining attribute.” – Professor X, “X-Men,” United, 20th Century Fox, 2003
When it comes to home video entertainment, we sometimes think Joni Mitchell was right when she wrote in Big Yellow Taxi…“You don’t know how good you have it until it’s gone.”
That’s the way we feel about the home entertainment industry.
The old way had a helluva run.
Folks bought TV with antennas propped up on roofs around the globe and tweaked the direction of the antenna to get the best reception of their shows.
That was a pain in the arse and really only gave modestly good viewing and places for birds to rest.
When broadband cable and today’s FTTH (fiber to the home) came to your neighborhood, they came with an offer you couldn’t refuse … a ton of TV channels – everything you could possibly imagine – and home internet connectivity.
People were in fat city, they had it all! And the cable guy/network bosses knew it.
Everything in one sleek, smooth bundle and they knew you were hooked so… That’s right, they could make money–big money.
All they had to do was keep offering companies opportunities to promote their stuff to family members of all ages.
They were hungry to reach people in their homes and folks were hungry to watch more and more of their content.
Okay, so you had to put up with “a few ads” which slowly grew to 20 minutes out of every hour of entertainment. But those breaks only gave people a chance to hit the kitchen or the bathroom, so nothing was really lost.
Oh, and if you missed “your” show at 10 a.m. or 9 p.m. on Tuesday, you could always wait for reruns at the end of the season and catch up.
It was awkward. It was expensive (steadily climbing to $100/mo.), but it was still easier and “less expensive” than leaving the house to go watch a movie at the theater.
Networks and studios were making piles of money, so what’s the harm?
Then the techies – Netflix, YouTube, Amazon and Apple – got involved by offering an inexpensive home service ($4-$8/mo.) and a constantly rotating set of shows/movies you could watch whenever you wanted and even on any screen you wanted.
They were fresh, hot, sexy, easy to add/drop and freedom from all those damn ads!
Networks and studios didn’t see them as much of a threat to their business and even rented them some of their content. People liked the new/old stuff.
Suddenly, the younger crowd had the power of the internet for their entertainment at home, in the office/classroom, on the road … everywhere.
The old boys were worried they were missing out on monetizing the younger crowd and Wall Street was already telling folks the cable bundle was dying and the path forward for home/personal entertainment was streaming.
After all, they weren’t focused on just the home country crowd, they wanted to sign up people everywhere who had a screen – nearly 2B TV households and 5B smartphones worldwide.
Despite the fact that YouTube (Google) and Netflix are the only streaming services really making large profits, Wall Street has decided it is time for the studios to dump their old-fashioned pay TV channels and move strongly/aggressively into streaming.
You know … rearrange their inventory.
The networks/studios have their feet in all of the camps pay bundles (dwindling), broadcast (dwindling), streaming (rising) and theatrical (kinda’ necessary).
They’re still making modest/fading profits with their pay TV stuff, “investing” (losing money) in tomorrow’s entertainment solution and trying to figure out what projects should go to theaters and … how long.
It’s tough, it’s expensive and it has to be fixed.
Now that there’s a clear vision of profitability for a few and a foggy promise of profitability for streaming, so folks are considering what they’re going to do with the stuff in the closet … old but still kinda’ good stuff.
Do you spin it off, sell it for best offer, nurse it along and remember the good times or use it as another one of those great – and sometimes profitable – tax write offs.
It depends on the creativity of your accountants.
Comcast’s CEO Brian Roberts is already taking steps to clean up the mess, spinning off their cable channels – USA, Syfy, E! Oxygen, Golf Channel, CNBC, MSNBC – into a closely held new entertainment company.
Bob Iger could free up a lot of Disney’s entertainment assets by partnering up with Roberts – as he did with Hulu – with SpinCo adding ABC, FX, National Geographic, History, A&E to the mix.
Between the two, they know a couple of folks who know how to run the multi-armed organization for years to come.
You know, folks who … know when to hold ‘em, know when to fold ‘em, know when to walk away. And make money doing it.
Skydance Media has its hands full with their new Paramount + streaming service and studio operations and really doesn’t have much use for the cable TV stuff such as CBS, MTV, Comedy Central, BET, Showtime.
Then there’s Liberty Media’s John Malone who owns a big chunk of WBD and has more than a passing interest in seeing some returns on his investment.
In addition to a lot of tax write-downs David Zaslav has done to make the company’s books look good, he also has a bunch of linear channels – the Discovery suite, TBS, TNT, CNN, Cartoon Network – in his inventory that he needs to do something with.
He’s gotten as much out of them as he can and it’s time to focus on the profitable studio IP and nearly profitable streaming service – Max.
The remaining independent linear companies – AMC, Hallmark – are already taking long/hard looks at their future and joining a new bundle would enable them to maintain their existing audiences and probably bring others back.
None of the streamers – Netflix, Amazon, Apple, YouTube – would be interested in them but they would make a nice bundle of pay TV channels for broadband and wireless consolidators like Comcast’s new Versant, Spectrum, AT&T, Verizon.
BAM! you have a nice, smooth bundle of content – news, game/reality shows, unscripted/scripted programs, movies.
Repackage it all, give it a new coat of paint, get an aggressive social media marketing program, ditch the carriage charge load and price the bundle at $40-$50/mo. plus the family’s standard broadband service.
Why?
Differing Tastes – It shouldn’t come as a huge surprise but different people like different video entertainment depending on where they live, their age, their sex and well, just about everything. In addition, more “mature” audiences enjoy a sampling of new entertainment as well as predictable standards.
No one today likes 20 minutes of ads an hour … honest!
And no one likes the idea of paying for 200 plus entertainment channels when they only watch four – six channels or streaming services.
But it’s not all about the kids.
The population is aging, and they represent a large (huge) entertainment market!
They enjoy sitting at home, cracking open a beverage and watching a show/movie with friends without a lot of hassle.
And … they don’t like the constant search to find a movie/show. They simply want to kick back and enjoy it.
A compact bundle of regularly scheduled shows would meet the day/time entertainment needs of a lot of folks.
Then add “a few” streaming services to add international and edgy film/show projects and suddenly, you have the best of home entertainment for everyone in the household.
That could be a lot cheaper than the stuff YouTube TV offers for $83/mo.
Service providers – wired/wireless – are going to continue to invest in enhancing their service speed and service reliability. Then, they can grow (regrow) market share by offering an interesting range of entertainment options.
Serving the complete home entertainment market seems a lot more logical for long-term growth (and financially rewarding) than meeting the hunger of buy/sell people on Wall Street.
We realize the wired/wireless connection stuff doesn’t appeal to the brokers/analysts because well, it ain’t sexy.
Nope, it’s just the stuff that comes after the creative teams have done their work, the service has added the film/show to their library (and heavily promoted it) and the project appears on the home or mobile screen.
Now all you have to do is decide who gets the remote or if you buy multiple home screens and eliminate arguments.
It’s a small price to pay to keep balance in the household!
Best of all, it reduces churn, improves retention rates and delivers a steady stream of new/old and interesting content people get paid to make and folks are willing to pay for to watch.
Yesterday’s entertainment service can and will survive/thrive in the new environment as long as the content “managers” and creators focus on what regular people want to view rather than what Wall Streeters content is “the way of entertainment’s future.
Paying attention to consumers should be the first check point.
The reason is simple as Nightcrawler said in X-Men United, “Because most people will never know anything beyond what they see with their own two eyes.”
And in the entertainment business, that’s as it should be!
Andy Marken – andy@markencom.com – is an author of more than 800 articles on management, marketing, communications, industry trends in media & entertainment, consumer electronics, software and applications. An internationally recognized marketing/communications consultant with a broad range of technical and industry expertise especially in storage, storage management and film/video production fields; he has an extended range of relationships with business, industry trade press, online media and industry analysts/consultants.