Please, stop calling it cable. Cable bundled networks, and new streaming bundles are being announced by the day, but these new bundles are not replicating cable, nor are they replicated the incentivization structure, security, and limited access points of cable. Does that mean bundles are bad? Not at all. (Spoiler alert: people LOVE bundles.) But we need to be better with our verbiage. Yes, the pay TV business model was built on a collection of channels that were bundled into a single consumer product. And, yes, this corporate arrangement loosely approximates some version of that strategy. But this reductive theorizing about bundling completely ignores the key differences between the economics of streaming and pay TV. When we talk about cable we are referring to a very specific incentive structure, a very specific unified product, and a very specific relationship between supplier and distributor. Pay TV bundling, after all, was traditionally a leverage game, in which the weakest channels in a seller’s package (like Freeform or truTV) rode on the coattails of the strongest (e.g., ESPN or TNT). For distributors, it was worth paying for a few dozen barely watched networks in order to secure the ones that subscribers couldn’t live without. These days, however, the line between distributor and supplier has all but evaporated for most of the streaming juggernauts. And owning the relationship with a customer—having their viewing data, credit card information, geolocation, etcetera—is the coin of the realm. Rather than pursuing a singular focus on creating content and selling it to Charter, for example, Warner Bros. Discovery is concerned with interface technology, algorithmic recommendations, and editorial curation on homepages, all of which help the company utilize its shows and movies to attract and retain subscribers—and, over time, serve them ads. Even if some of the same players are still around, the business incentives have changed dramatically from the halcyon days of cable. To wit: In the cable era, the original differentiator was scarcity—both the limited pathways to access video content and the small number of in-demand networks that consumers were willing to overpay for to watch their favorite shows. Streaming widened the aperture by multiplying the number of pathways and flooding the marketplace with content, which made it all seem more indistinguishable. Cable companies were stable and static businesses, whereas streamers must constantly worry about month-over-month churn. Now again, that's not to suggest bundles are bad. The Disney+/Max bundle is a great idea (and an even bigger win for Disney). The Peacock/Apple TV+/Netflix bundle helps all three companies for very different reasons. And, as we all know, we as customers LOVE bundles. But please, stop calling it cable.
Peter Riz
2mo
If it looks like cable, behaves like cable, and feels like cable, then perhaps, in essence, it is cable... While it’s technically true that streaming is not the same as cable because it uses the public internet and doesn’t require provider-specific hardware, the user experience is becoming increasingly similar. Content aggregation is occurring at the brand and service level, not the content level. You can’t open a MAX app and see Disney or Netflix content; you need to navigate through separate apps, just like switching channels in the old days of television. Moreover, streaming services initially promised a user-centric experience, unlike the old cable model. However, the shift towards bundling is a revenue and profit monetization strategy for service providers. These bundles, while offering a price benefit today, set the stage for standalone service price increases, driving users towards bundles. This move stifles competition, making it harder for small and independent services to gain traction and build larger audiences. In essence, the business approach mirrors that of cable. If it looks like cable, behaves like cable, and feels like cable, then perhaps, in essence, it is cable—just in a digital disguise.
David Sehring
2mo
It is bundling and is cable all over again. Obfuscation is more to your points. I can tell you point blank that programmers want to bundle licensed programming in any and all media and platforms ... and platforms are operating the same way the cable guys used to by making customers choke on services and programming nobody wants. The name of the game is making the customer choke on programming nobody wanted with the old bait and switch of what their brand used to represent. . Seriously - MAX is just a dumping ground for Discovery crap. Not the HBOMAX or a semblance of what HBO represents. Yeah - it's cable all over again but worse because the streaming customers bills are going to be much worse than the old cable bills.
Chris Sturges
2mo
The interesting part I find is the big streamers and aggregators have left a segment of the market behind... the audience that still wants some of the niche programming that mattered to THEM.
Michael Smith
2mo
So true. Cable was a platform product that delivered content through a proprietary hardware network of headends, satellites, coaxial cable and set top boxes. The broadband open internet and net neutrality upended that. Now we’re merely talking about programming service bundling, something that has existed on the cable platform for years with offers like HBO/Showtime/Cinemax bundles (we called them packages back in the day) and other discounted bundles of a la carte premium channels. Disney+/Max is a programming package for open internet delivered video, not the new cable. The problem for legacy streamers is that the new bundles don’t require the purchase of the basic cable programming product that still drives most of their profits and won’t solve their cord cutting revenue bleed problems. The math doesn’t work when you’re trading $80 basic cable subs for $40 streaming bundle subs.
I call it the “Invisible Cord Paradox” - people forget that you always need some kind of technical infrastructure to access content (and bundles). Hence, cutting the cord is not cutting of “cable” from the business. It only changes the model and incentive structure of the businesses along the value chain as you outline so perfectly well in your post. https://globalmediaconsult.com/2022/09/14/the-invisible-cord-paradox-of-tv-streaming/
Michael Gat
1mo
Who's this "we" who loves being forced to pay for content we don't want? I used to have a couple of streaming services. I now have zero. Not worth paying the extra dollars for the new and improved bundles, when what I want is the niche content. The internal business drivers may be different, but I'm not buying the internal business drivers, I'm buying the content. And what I'm seeing is a warmed-over version of what I had a dozen years ago: an expensive package (or, more likely multiple packages) that I now have to pay for, just to get the 1-2 hours a week of niche content that I'm interested in. And just as I cut the cable long before it became fashionable, I've cut off the stream now.
Michael Nagle
2mo
It is essentially basic cable on steroids (Peacock) with two new Premium bundles replacing HBO and Showtime (Netflix and Apple TV). It helps that Apple TV isn't hip to marketing content. They're device company. Netflix similarly doesn't have an audience without broadband and they likely can see how many of those IP addresses come from Comcast so this is a bundle that alleviates workflow from players who don't have the human power to do "it" themselves. Now if they only had a screen manufacturer at this "party" we might really be in business...
Matt Ference
2mo
Constantly worry about month-over-month churn... I don't see that as a bad thing. I see this as... Finally the oligopolies have to be responsive to the market.
Here is another factor that is often overlooked when comparing the two models: why is the cost of data/internet connection not included in the comparison?
Founder at BlackOakTV | Content, Growth, Entrepreneurship | Helping Create More Content for the Culture.
2moBut it is cable. At least in the proverbial sense. You have companies making their content available via a third party to make money from a wide base of users, some of whom won't be interested in said content. Even in the Disney/Max bundle, some people who want Disney will get Max just because it's offered to them at a discount, even if they don't have any intention of watching it. To your point on owning the user relationship: that incentive is slowly going out the window. WarnerBros Discovery could care less. They went running back to Amazon. Now they're with Disney. They're also with Fox. They're giving shows to Tubi and renting more to Netflix. We can't honestly say Max is concerning itself with algorithms and homepages when everything about their strategy screams they're just looking for a check. Obviously, what's happening isn't EXACTLY cable. But the sentiment is indeed cable. We're seeing a rebundling consisting of the same cable channel content we had 10 years ago. While it may be in a different form, with more access points, offering less security, today's bundles are still about the 3 things that mattered most in cable: bigger audiences, less churn, and making the consumer pay for more of what they don't watch.