Commentary

Is The Legacy, Traditional Pay TV Bundle Dead?

by Wayne Friedman , Staff Writer, June 23, 2020

The slow death of the TV bundle is out of the bag. Actually, the bag is flapping in the wind in a rainstorm.

Mike Cavanagh, CFO Comcast Corp. says the company is "not wedded to being necessarily the seller of a bundle.”

No kidding. Fast-growing connected TV/OTT usage via premium video streaming apps has taken the business by storm. Virtual pay TV services? Sling TV, AT&T Now, Hulu + Live TV and YouTube TV? Ho-hum, at best.

All kinds of pay TV providers are seeing cord-cutting of all types. Comcast isn’t immune. Its residential subscriber losses nearly quadrupled in the first quarter to 388,000, from a prior-year decline of 107,000.

That’s the least of it. AT&T has lost over a 1 million DirecTV/AT&T Now subscribers in just the first quarter of this year alone. Satellite TV programming, Dish Network is no exception, either.

Perhaps all this is why the marketing of all these services -- especially legacy pay TV systems -- cable, satellite, and telco -- have seen little in the way of big TV advertising messaging.

Because, really, what would the message be? Please continue to spend $100 a month for 200 to 300 channels? Consumers might ask why.

Legacy TV providers can’t really answer that question well -- not when Netflix, Disney+, ESPN and Hulu (on demand) could give you a good deal for collectively spending around $30 a month. And especially in this weak economic environment.

Which brings us to one of the stories we can have a good yawn over: Cable networks being blacked out of legacy pay TV services, due to stalled contract negotiations.

This is what is happening to the NFL Network and Dish Network. Right now, the sports network isn’t being carried on the satellite programmer -- just a few weeks away from the start of the NFL pre-season, which begins in late July/August. The regular football season starts in September.

So, is outrage building among key NFL consumers? I’m sure there will be if this continues closer to the start of the season.

We know the drill: TV sports networks charge expensive carriage fees to pay TV providers.

Sports TV content not only being a big deal among TV subscribers but pay TV providers get to sell higher-price sports TV ad inventory as part of those carriage deals with sports networks.

Dish Network has bigger fish to fry -- especially when it comes to highly prized spectrum it needs to build (or sell) a business around, according to an FCC agreement.

Dish, Comcast and AT&T are all about boosting broadband faster and securing more efficient entertainment pipes.

The TV bundle? It’s not about buying a whole basket of fruit -- just the plums you want.

cable tv, sports, tv

3 comments about "Is The Legacy, Traditional Pay TV Bundle Dead?".

Check to receive email when comments are posted.

Ed Papazian from Media Dynamics Inc, June 23, 2020 at 9:58 a.m.
Wayne, a very likly possibility for the next five years will be the demise of many cable channels which will either go dark or be forced to ask people to pay for them individually via streaming subscriptions. This will happen because the "pay TV" distributors must become far more selective in determining which channels they pay carraige fees to in order to balance their costs against shrinking subscriber bases --- while, at the same time, they will be forced to offer much smaller and more flexible bundles to their remaining subs. If this happens, channels which now cover 70 million homes via "pay TV" will be reduced to a tiny fraction of that coverage as AVOD services, thereby greatly reducing the number of channels available to the average TV viewer. Meanwhile big time AVOD, via Comcast/NBC, Disney--yes, Disney---Viacom/CBS, etc. will come to the forefront in a big way as streaming usage expands. We will shortly be releasing a major report on what we think will happen in terms of the impact upon viewers to our MDI Direct and "TV Dimensions" subscribers. It will really make them think as many variables are at play.
Reply

James Smith from J. R. Smith Group, June 23, 2020 at 9:24 p.m.

Are any of these cable networks, MSOs etc, really planning for "life after the bundle/tier? Do consumers need four or five nets that are "are all crime, all the time?" What percentage of subscribers are aware of--carriage fees in general--the fact that they are paying about $20+
monthy for channels they never watch? How long can business models built on a TV landscape that's over 30 years old sustain given, present conditions? Was the Disney move really the tipping point?

Ed Papazian from Media Dynamics Inc, June 24, 2020 at 7:34 a.m.

James, the heavy TV user household is the core of the "pay TV" providers base. This group which represents, maybe, 25% of all TV homes, watches TV at two or three times the average rate and their residents tune in many more channels out of those available than the averages suggest---especially over longer time frames than the arbitrary week. Also, it's not an individual decision but a family concensus as to which channels are worth the money. I may not like or watch Lifetime but my wife may love that channel. Result: we pay for both Lifetime and The History Channel, which I adore but she hates. Last but not least, there are many more folks out there who enjoy the broad based "linear TV" program menu, including countless shows that you and I probably disdain. And many of these programs are consumed outside of prime time where you---probably---and I mostly reside. These heavy viewers---mostly unemployed or retired as well as less educated---have time on their hands and paying $100 per month for a cable channel bundle---which is 50 cents per channel--seems like a better deal for them than most other forms of enrertainment or information gathering. That's why, if the cable system and satellite distributors are savvy, they will come up with more flexible bundles and make other moves to retain enough sunscribers to be profitable.