Netflix continues to grow and be popular. It’s something HBO and Showtime must be ruminating over, especially given Netflix’s somewhat minimum attachments to TV/media pipe owners -- even considering the recent Netflix-Comcast direct Internet access deal.
Netflix gets around $10 per month from customers. HBO and Showtime get a bit more, with a big piece going to pay TV distributors. Consumers typically pay $16 a month for HBO, with HBO getting $8 and distributors getting $8.
HBO Go surely has advantages as a popular video app. But what about wholesale change? Perhaps the big push for unbundling won’t come from cable operators, satellite distributors, telcos, or even consumers. Maybe it’ll come from TV networks themselves.
ESPN would be a different case. Distributors continue to pay over $5 per subscriber monthly to the big sports network. They also continue to complain about it.
None other the Chet Kanojia, founder/chief executive officer of Aereo, says it won’t be too long before someone figures out how to bundle broadcast stations with the likes of a big cable network such as ESPN or HBO -- starting what many industry executives believe will be a cable unbundling process.
I’m not too sure what the financial formula for ESPN would be, nor whether other Disney/ABC networks would also be packaged in that deal. But you can count on what Kanojia told Gigaom: “Any industry compounding at 7% is just unsustainable…. A change is inevitable.”
Networks would only opt out of the traditional pay TV distribution system if they could get more dollars -- or free up some of their business constraints.
No surprise there. If HBO or ESPN can figure out how to get more consumers paying more for their networks -- while possibly keeping some or most of their existing business arrangements -- they’ll surely take the leap.
And then all the strings will come loose around those bundles.