Consumers Still Pay For Premium Content - When It's Streaming

The warnings are plentiful over the past several years: There are too many premium-scripted TV shows.

The question remains: How can every new TV show gain support? Well, it can’t -- unless consumers find more ways to pay for it, such as OTT platforms or single transactional video-on-demand efforts.

During the recent FX’s TCA summer press tour session in Beverly Hills, John Landgraf, chairman-CEO, FX Networks -- which will become a part of Walt Disney’s entertainment empire soon -- said there are 5% more scripted TV shows, or 319, so far this season.

Streaming shows are up 46% this year, from 52 to 76 shows. Premium cable’s tally is also strong, at 42% more, from 19 to 27. (The latter is gaining, partly as a result of streaming.)

On the losing end are the bigger TV players: Basic cable is down 11% to 102 from 114. Broadcast is also off -- 5% to 114 from 120.



Looking at full-year 2017 results, Landgraf says there were 487 scripted TV shows, up from 455 the year before.

Where is the support for this? Consumers are paying more out of their pocket for OTT platforms -- that extra $10 or so a month they might pay for Netflix, Hulu, Amazon or other services that are ad-free. (Hulu also has one package that has limited advertising for lower subscription fees.)

But what about the future?

Higher prices are coming even for OTT. For example, Netflix could see its pricing hit around $15 a month in the next few years, MoffettNathanson Research says. Still, analysis reveals consumers will still be accept OTT services at this price level.

If national advertising is dipping on legacy media -- basic cable and broadcast -- and subscription fees are rising (and to a lesser degree ad revenues) on streaming and premium TV platforms -- you can see where this is going.

This isn’t to say that owners of legacy media won’t benefit. Take CBS. It now says 61% of its revenues come from advertising, the lowest share of its total revenues ever. This rise is attributable to license deals and OTT, as well as international TV license revenues and other businesses.

But is this a format for the future? Consider CBS All Access, which is a $5.99-per-month subscription price and, in part, ad-supported, although not at the commercial load levels of the CBS TV network.

Landgraf's next TV show estimate should discuss how this works for some producers -- as well as how new content will be marketed. FX continues to invest in its own streaming platform -- as do other traditional networks.

For now, consumers don’t mind paying higher monthly pay TV fees for more premium content -- whether they see it or not.

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