Commentary
How Cable May Have Just Sunk Its Own Ships
- by Cory Treffiletti , Featured Contributor, September 20, 2023
To recap, Disney shut off its services to Charter Spectrum last week for a few days, resulting in lots of people not being able to watch NFL football, among other things. In related news, the writers and actors are still on strike because they want to be fairly paid for their work in streaming and digital.
This is analogous to the North American plate rubbing against the Pacific Plate and building up tension over hundreds of years. Charter wanted to offer Disney’s streaming services to its users, and Disney wanted to retain control. In the end, Disney balked and allowed Charter to offer these services.
Why is that important? Well, Charter is now offering the same services that threaten its core business, as more consumers jump ship from cable to streaming packages, and Charter knows this. On the other side of the story, the writers and actors know streaming is the future, and they want more control and better compensation for their work as it airs in these new channels.
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All ships are pointed to the same dystopian, cable-less future and while the writers and actors recognize this and are planning for the future, Charter is essentially pouring water on its own boats.
Charter says it has stemmed the death of its business by package these superior streaming services into a single bill. It has actually accelerated its demise by inviting the fox into the hen house. Charter is trying to save itself by looking short term vs. long term. Consumers will find a way to cut Charter and get Disney later, and this gives them a taste of that future.
That long term is where the writers and actors are focused. They know their content will be on streaming services, and they are planning for that now, willing to take a hit by striking in an effort to guarantee their future. This gives them more of the leverage in the negotiation.
Subscription services that do not have a timeline locked in are the new norm for consumers, and this even further hastens the demise of cable, where you typically lock in for a period of six or 12 months. That business model simply will not succeed anymore.
The truth of the matter is, content is still king. If Charter invested in content, it could stand a chance. Netflix does. HBO does. Disney certainly does. Exclusive access to content is the name of the game, which is what creates loyalty. Consumers need have no loyalty other than that. What they do have is short-term memory, and they will forget from time to time that they have these subscriptions in general. That plays to the business model of streaming services, which does not play well for Charter.
It's going to be a wild ride the next two to three years while the dust settles on these companies. I think this deal will go down as a bad one for Charter, though that still remains to be seen.
MVPD is the future. Charter, Comcast, Altice, and so on are not just "cable" companies - they also provide broadband connectivity, among other things as well.
Consumers access their content of choice, on their screen of choice, at their time of choice. That said, they also schedule their time around their favaroite live sporting events, breaking news, or "entertainment news" depending on how that consumer leans.
I think the future is bright with opportunity. My humble opinion and $.02 for what it's worth.
You make a valid point- so does the auther in relation to content. Comcast/NBCU is in a better positin than Charter b/c they own and distribute content along with the other "pipes" in the value chain. Will be interesting to see how it all unfolds!
You are spot on there! No doubt content owners will be in the cat-bird seat. Which is why the powers that be at Disney are happy with the agreement they secured. Hoping that happens across the board with the other MVPD's as these situations arise.
These carraige agreements have plagued our industry for decades now. To quote the 80's band Cinderella - The more things change, the more they stay the same! LOL
I completely agree - things are just starting to get very interesting indeed.
I agree that it's going to be a wild ride for many smaller cable channels as well as many streaming services over the next few years---there are too many of them. Also in the mix are the sports leagues with their constant demands for more ad dollars to pay the greedy players and their agents off. And let's not forget the writers who want more.
Yep, everybody wants more money but are we living in a rapidly expanding economy with a fast growing population that can support all of these desires? Can every cable channel----no matter how small and selectiely programmed ----make a profit? Can every FAST---with only ad dollars to support it ---make a profit? Will the concept of carriage and re-transmission fees die out if DirectTV, Charter, etc. cease to distribute TV content? Or will they start to create content? If they drop out and there are still customers willing to pay will someone else---like YouTube TV----step in and take over the distribution chore? If so, will it have to continue to pay hefty carriage fees to get the content it sells to "pay TV" subscribers?Will advertisers continue to pay exhorbitant CPMs to the pro and college leagues because they also use the plyers to promote their products? Or is a time coming when many will say no and move to other venues?
There sure are a lot of questions to be answered and I could name some more----like will the nature of TV content change to greater than ever use of reruns and talking head or "unscripted" programs in response to the writer's strike and that of the actors and directors which will, no doubt, follow?
Frankly I don't have any hard answers---except to say that big shakeouts are coming---as only the fittest will survive and prosper, not everybody. Which may be a good thing. As they keep saying, "Change is good". Maybe they are right.
Most cable companies are more than just cable, they are in broadband, cell phone business, etc. The media companies will need to shut the smaller networks which is kind of surprising that they haven't shut down on their own, Warner Discovery, Paramount which TeenNick is an afterthought with just airing Henry Danger Force on a loop 24/7 which should shut down ASAP.
NBCU was smart to shut down the smaller network channels in the past few years which they saw that few watched and law ratings they cut the smaller networks, which surprised Warner Bors Discovery, Paramount hasn't got it with cutting the smaller networks yet.