Cable Unbundling and Long Predicted Surprises

It’s been a very interesting few days for the television industry. Within 24 hours, both HBO and CBS announced internet-only streaming options to be released in 2015. Though there has been much discussion around the disruption of the traditional television/cable model, it was still jarring to see two quick leaps forward occur without much notice.

Does this spell the end of DirecTV, Cable and the traditional model? Probably not. At least not yet. What it clearly does is give these content providers negotiating power with the Comcasts of the world. Peter Kafka in Re/Code does a great job of laying out why:

Some of the TV networks that are heading to the Web will even say this out loud. “Just the threat of going [over the top] gives us added leverage” HBO CEO Richard Plepler said on Wednesday, at the investors conference where he announced his plans to sell HBO on the Web.

Plepler was specifically talking about HBO’s deals with international pay TV networks, who license HBO programming. But he will certainly use the same leverage when he deals with pay TV distributors in the U.S.

For instance, Plepler can now try to convince cable giants like Comcast to package HBO with its smallest bundles of TV networks, which increases the pool of potential subscribers. He might also ask for better revenue splits on the HBO subscriptions Comcast does sell.

I think the “smallest bundles” angle is no small thing. As both an avid HBO watcher and a DirecTV subscriber, I am forced to buy the most premium package – along with a boatload of channels I don’t use – in order to receive HBO. And as someone who doesn’t have time to watch much TV and watches shows largely from my DVR or my Roku, this is a really inefficient use of both my time and financial resources. If I can just pay $20/month for HBO through my Roku and then downgrade my DirecTV services, that is a win for me as a consumer.

(Of course, DirecTV has me by the proverbially sports nuts because I love the NFL Sunday Ticket, but still.)

But outside of this being a short term negotiating tactic and a way to make some incremental revenue, will it signal the “Great Cable Unbundling” and a move towards a true a la carte system? It just might. I tend to not swing with the extreme proclamations that others do like “TV is Dead!” or “This will Kill Netflix!” or even “Top 7 Ways Your Mom’s Alcoholism will Destroy your Life!” But what I do know is when disruption strikes it does so more quickly than people expect, even if there is lag time before it becomes a reality.

Case in point, the “mobile revolution.” For most of the aughts I heard from pundits, colleagues and Google sales reps how mobile was going to change the world. And to just look at Japan and other countries! But it never materialized domestically…until the iPhone was introduced in the late part of the decade. And then within a few years “BAM!” 40% of your web traffic was coming from mobile and many, many people were still caught flatfooted.

Think music streaming and the massive consumer behavioral shift in just a couple years. Or texting. Or movie streaming. And on and on.

So while this may not be the end of the traditional model for consuming “television” content, the infrastructure is there with both cheap high-speed bandwidth and heavy usage of “over the top” streaming services like Roku, Amazon Fire, TV Apps and Apple TV.

And technology leaps still tend to surprise, even when something is long predicted.

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