Commentary
SVOD Vs. Traditional Pay TV: Do You Get What You Pay For?
- by Wayne Friedman , Staff Writer, December 11, 2019
The current disruption of the traditional pay TV industry continues to excite, and for others, discourage.
Consumers hope streaming will eliminate the expensive TV service price, which costs most of them $100 to $150 a month.
Bringing that down to a $15/month price tag seems too good to be true. Well, Tom Rutledge, CEO of Charter Communications, says there is a lot more to it.
During the UBS Media Conference, Rutledge said: "When you add them all up, [it's] a lot of money. ... The [pay TV] bundle is very expensive, and the dis-aggregated a la carte repackage [emphasis here] product is even more expensive."
That’s the fear: That the business is breaking down only to be built up, reconfigured at a bigger price tag. Is that what consumers want?
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Right now, Rutledge says many of these discounted packages don’t have much in the way of live sports or 24-hour news. “So there are a lot of reasons why those products aren't going to satisfy the full needs of television consumers.”
Be forewarned: Increasingly, many of the broad-based virtual pay TV services, looking to replace cable, satellite and telco pay TV products, have already start to raised their prices -- including AT&T Now (formerly DirecTV Now) Sling TV and Hulu+Live TV.
The reasoning is easy to figure out -- no one is making any money from this stuff. Profit margins are razor thin -- if at all.
Rutledge points to one reason why: Those big content producers. The major studios heading into the D2C (direct to consumer) business do lot of business with traditional pay TV companies, like cable operators.
“Our ability to sell that product is ultimately constrained by our relationship with content [companies]. We have to manage that in terms of the kinds of power the content companies have."
More troubling: Rutledge also blames the pure glut of content and multiple ways of getting it. Another financial issue: Consumers are increasing just doing more password-sharing.
It’s that time of season. Everyone is looking for a deal.
Wayne Friedman is West Coast Editor of MediaPost. You can reach Wayne at wayne@mediapost.com.
The average cord cutter who thought that this action was going to yield a huge savings will end up paying either a lot more for his/her household's TV/video content than before---or the home will drastically reduce its use of TV/video and net the savings. I'm betting on the former as the most likely scenario for most cord cutters.
I dont know why people think that consumers need to be subscribing to multiple services to get all of their content. I dropped pay tv ages ago and there is more than enough on amazon prime and netflix to watch with an antenna for locals only. If you have young kids, add disney or if you have superhero fetish. The open switch is sports and how that evolves.
I would argue that netflix and amazon need to market their content better. They should be publishing an online version of entertainment weekly, tied to their content to encourage retention and stickiness.
They have my email adress after all.