Lately, media news has been dominated by two headlines: Comcast’s acquisition of Time Warner and Netflix’s release of the second season of "House of Cards" (I mean, even President Obama tweeted about "House of Cards"). These have more in common than you think -- something to do with my gym analogy as well, so bear with me.
Basically, discussions of both these seismic media events have managed to segue into complaints about the current cost and structure of the cable bundle -- you know, the giant packages of channels people are “forced” to get. With regard to Comcast-Time Warner, the merger creates pricing concerns about those cable bundles (in spite of the fact that pricing is really driven by content costs). And with "House of Cards" (I watched all 13 this weekend! So good!), there are plenty of folks getting smug and saying, “Who needs that stupid cable bundle now?”
If you’re hand-wringing over the cost of your cable bundle, or you’re gloating about how "House of Cards" is making that cable bundle irrelevant, I’d like to politely request that you shut up. You’re going to ruin it for yourself and for the rest of us. The arguments against the cable bundle are, in fact, even more ridiculous than the idea of paying for my gym membership by machine.
Let’s keep going with this analogy. Sure, there are specialized gyms, ones that only offer spinning bikes or CrossFit equipment, but the reality is that joining those specialized gyms costs around the same as joining an all-purpose gym. And then I end up having to belong to two gyms. I guess I could join a cheap gym (or get just a basic cable package), but then I’d be stuck with the crappier equipment that gym happened to offer. If I didn’t like that, I could pay for private workout sessions, or buy single SoulCycle classes (media analogy: buy a particular show's episodes on iTunes) but that adds up fast. I’d quickly go back to wishing I had unlimited and potentially new stuff to do. Besides, no one is forcing me to join a gym in the first place. I could go for a run outside for free. (Or I could ditch cable and just go broadcast.)
The point is, the gym's role is to constantly optimize its offering to justify the total cost of membership to the broadest audience. And that is the single best analogy for the cable bundle and why it’s not just relevant, but optimal. To all the so-called “cord cutters” who like to brag they don’t get cable and live off the likes of Netflix and Hulu, as a cable subscriber I say, “You’re welcome.” Why? While digital TV has its tentpoles, like "House of Cards," a vast majority of the people who watch it are also consuming "The Walking Dead," "Mad Men," and so forth. And you know what paid for that content to get created? That’s right, the economics of the cable bundle.
And Netflix, in effect, is basically its own mini bundle. I love "House of Cards," but my Netflix subscription is also paying for access to the entire repertoire of "Sharknado clones," which are available for streaming and which I would never, ever watch. (I swear.) This is because content is a very expensive, long-lead capital investment. The cable bundle is really a bunch of mini bundles (HBO, Viacom, AMC Networks, etc.), and this bundle-of-bundles has created the single greatest economic incentive and financing structure for the development of creative content -- ever.
Don’t love the gym analogy? Try this one: think of the cable bundle like a hedge fund. You invest in a portfolio of stocks. Some overperform and some underperform, but you don’t get to go back and tell your hedge fund manager “Hey, next time, just invest in the winning ones.” That said, the stocks that continually underperform will be dropped from the portfolio. This is relevant to cable in that content development has very long lead times. Your cable bills today are financing content that won’t hit the screen for years. Without that stability, we wouldn’t have the ludicrous amount of high-quality programming we have today. And that doesn’t even get into news and other live programming, or sports (which is another article in itself). Basically, think of it as the really expensive equipment at the gym.
I will gladly join you in your complaints about set-top boxes’ user interfaces, the lack of a decent solution to so-called “TV everywhere,” or the ad load in cable content. But I’m not going to trash the economics of the cable bundle and the ability it has given great storytellers to invest in the creative process that has led to a golden age of television content.
We didn’t have TV shows like "Mad Men" or "Suits" (another favorite of mine) 30 years ago. And that’s because, over time, the bundle has paid off. As a fan of these high-quality television shows, I say it should continue to do so. And as a fan of my gym, I should stop complaining about it.