Online Viewing Has An Off-Ramp Problem

God bless early adopters. They pay the huge prices for items the rest of us aren’t so sure we need or want. The color TV! PCs and iPads. Cell phones the size of a loaf of bread! Their early confidence or just sheer excess cash made life better, or at least damn different. Out with the new. In with the newer!

Which brings us to over the top content providers. There are so many of them that you can make yourself silly trying to remember why one of them might be better than the other. As a recent report from Parks Associates points out, this might be a long search for entertainment nirvana.

In July, it noted that half of Hulu’s customers canceled the service the month before and that 9% of Netflix’s customers scrammed, too. Smaller services lose customers at Blackberry-like rates.

Over-the-top cutters!

Oddly named argued, a little, that disconnecting from OTT services isn't like disconnecting from cable or satellite TV. Those services spend a ton just to get you to hook up, while Netflix and the others aren’t out much because you can sign on again just as easily as you left. In the case of Roku or Amazon or Apple, you own the set-top box, not them, so if you leave, the pain is largely your own.



Now, Verizon’s Go90 is coming along, with its mobile-first service, which will make device-o-vision even more ubiquitous, if you’ll excuse that phrase. A couple decades ago, the prospect of TV Everywhere would be considered a curse. Now it’s a goal and we’re getting close to our Mission Accomplished moment.

But all of that begins to make things Not All That. As cable’s universe grew, cable’s flotsam and jetsam increased to the point that subscribers may get 189 channels, but only watch something like 17.5, according to Nielsen. Online video might be overhyped before it even matures.

With cable, you can’t quit if you want television, essentially. But with OTT, that’s possible, and maybe, not threatening. 

Or it is. Hulu paid $180 million for rights to “Seinfeld,” with the idea of attracting monthly customers or advertisers or both. Netflix said last year it was committed to spending $6 billion on content between then and 2017.  Disconnects upsets that game plan; when it didn’t renew its film contract with Epix last month, basically a cost-containment decision, its shares plummeted on the news.

That does seem to be online’s problem. Now that the business is producing more premium content to watch, it may find it’s too easy to cherry pick.
1 comment about "Online Viewing Has An Off-Ramp Problem".
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  1. Luke mcdonough from AIR.TV, September 15, 2015 at 1:09 p.m.

    When distribution is dear, and valuable, distributor leverage grows: This has been the case for decades, as the cost to build a physical cable network grew anbd grew, and then disappeared completely into the realm of "existing MSO's only."  At the same time, the value of cable TV distribution went from near zero at the start, to become one the most valuable distribution windows for all TV and film. We ended up with a small number of MSO's, controlling a finite, critical distribution window, and the result = Comcast.

    OTT services imagine that they will be the next Comcast...and while it is no joke to create Netflix-like infrastructure, it is by no means out of reach for a reasonably well-funded start up.  Distribution is easy, and getting easier... great content, on the other hand, is permanently limited by the availability of great talent, something that does not grow just becasue distribution proliferates, (which is why 189 channels on cable does not produce any more great shows than 17 cable channels would have produced)....

    Leverage will now swing ever more in favor of talent and content owners, and MSO's = Newspapers...The "cable network" or "MSO" of the future is not going to be a box, or a will be the service that is able to recommend/promote the right shows to the right consumers, at the lowest possible cost to content oweners...the service that allows consumers to find what they like without going through 1000 channels, and which allows content owners to reach their target audience with the least friction...and sell ads or downloads to those consumers without giving most of that money to the myriad middle men who currnetly sit between them and a Comcast sub.

    Netflix knows this...which is why their original content business = their real Epix movies and TV re-runs is a commodity business...and Netflix knows where the real leverage lies.

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