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.
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.