The ‘New TV’ Era is Entering a New Phase
The past few years of the ‘new TV’ era has been characterized by four major trends: the explosion of original programming; the growth of SVOD options (DirecTV Now, Sling, Hulu + Live, YouTube TV, etc.) and cable cord cutting; altered viewing habits (bingeing, screens everywhere); and a dramatic reshuffling of the media landscape, through M&A. For consumers, this has meant a proliferation of choices — volume of content, more options for where and how to view it, and new models for how to pay for it.
But just as we get accustomed to this ‘new era’, I believe more change is coming, and at an accelerated pace, over the next couple of years. It is going to be pretty messy. And there will be a more pronounced set of winners and losers. Here are my thoughts on how this might play out, and what sorts of opportunities will be created.
Content Wars. Two things are going on here. On top of the continued proliferation of content, a huge battle for rights fees is shaping up, given the altered structural landscape (AT&T-Time Warner, Disney-Fox, etc.). This means that consumers must become more accustomed to a constant deck shuffling of where some of their preferred content can be found. The average consumer is likely going to have to subscribe to at least one or more additional streaming content ‘channel’ (i.e. new Disney, new ESPN, new Warner Media) in order to maintain their existing library of content. There’s also been a run-up in contract values being awarded to marquee talent. Top writers, directors, actors, and producers are being courted like star sports figures.
Bills Will Go Up. Thought all this ‘cable cord cutting’ would sock it to the cable companies and you’d be paying a sweet $50 per month for pretty much everything? Think again. I’ll predict your ‘content bill’ will increase 25-30% over the next 2-3 years. Already this year, we’ve seen cable-esque fee increases from many of the major SVODs, as they pass down rights fee increases and their ballooning spend on original programming down to consumers. New streaming channels from AT&T/Warner Media, Disney, and Apple will only exacerbate this increasingly expensive and complicated picture.
It’s Back to the Future! You’ve gotta love the irony here, but all this change is going to drive us back in time, in some respects. To begin with, cable is making a comeback. First, their programming bundle has been rightsized and is competitive. I gladly pay $20 more a month for the X1 UI from Comcast/Xfinity than if I a la carted it. Why? Terrific voice search, an effective way of sorting through the complexity, and a more consistent quality experience with ‘streaming’ channels.
Another feature of this ‘way back machine’ is the survival of traditional advertising. Hulu has most effectively delivered this master stroke, dropping its price to $6 and providing advertisers with a needed additional way to reach viewers. Finally, just when you thought SVODs killed cable (and MTV 10 and the Giraffe Channel), there will be the return of the bundle! Only it won’t come from cable. It’ll come from Apple, or Amazon, or some of the SVODs who will need to come up with creative ways to package all these additional subscription options rather than the +,+,+ structure that is prevalent today.
There Will Be More Winners and Losers. For the past 10 years, it’s been more, more, more: More screens, more content, more SVOD options. But there are only so many hours in the day, and there is a limit to how much more consumers are willing to spend for their (broadly defined) content budget. Apple entering the picture later this year, in a still undefined way pricing and package wise, will be the catalyst, in my view, for a shakeout in the SVOD and streaming channel landscape. There will be some high profile failures…or some that are propped up as loss leaders by well-heeled parents with a broader agenda. I also expect that there will be a slow- down in the rate of growth for original programming. The current pace is unsustainable. In just five years, Netflix has gone from being the Neiman Marcus to Target to now practically the Wal-Mart of programming (plus the occasional ‘designer’ choice). Let’s hope it doesn’t become Dollar General.
5G Won’t Be Much of a Factor for the Foreseeable Future. No, you will not be getting unlimited 4K content delivered to any screen, wirelessly, nationwide, by your beloved wireless carrier. In the near-to-medium term, 5G (and continually improving, capacity expanding 4G LTE) networks will impact the TV/content world in a primarily experimental way. Experiment One, in the very early innings, is whether fixed wireless can become a viable broadband substitute/alternative. The answer is, maybe, in some places and for some types of consumers, but this will not be a broad-based, landscape-altering phenomenon. Experiment Two will involve some interesting partnerships and initial forays into the AR/VR and gaming worlds, leveraging popular programming and content relationships. Verizon, for example, is working on new AR and extended reality (XR) content projects which will be produced at a 5G studio in Los Angeles. For a glimpse at AT&T’s efforts, head to its Shape conference at Time Warner Studios in June. Initially, these opportunities will largely be extensions of content and brand relationships, sort of like the existing gaming and toy landscape.
One opportunity I see, from a consumer standpoint, is some sort of ‘uber guide’ to what’s available on what channel/platform. Type in a movie or TV series, and see a grid displaying what platforms it’s on, rent/purchase options, is it available for download, etc. This is an opportunity for Apple, especially if it’s prepared to show programming on rival platforms. There’s also a need for more comprehensive curation – both human and AI-powered. Sure, there’s been a rise in the number of TV reviewers/critics, but more help is needed to help sort through this incredible content choice.
This ‘peak TV’ era is also leading to ‘peak messiness’, with regard to sheer choice of platforms and channels. This will intensify with Apple, Warner Media (AT&T), and Disney entering the picture later in 2019. Expect there to be a big sorting out in the 2020-2021 period.