The Writing Is On The Wall
ESPN, Disney, CBS, HBO, Showtime, Starz, etc., have all announced plans to go direct to consumer with a video offering. Earlier this week Discovery, A&E, Viacom, and Scripps Networks decided to announce the upcoming launch of a non-sports streaming bundle of channels for under $20 a month. More change is coming to traditional pay TV as we know it.
Expensive TV packages will cease to exist replaced by Skinny Bundles and what everyone really wants - A La Carte television.
Cord cutting and Cord Shaving (where customers reduce the spend on their monthly pay tv service) is more of a reality than the industry leads you to believe. Recent estimates are over 65% of the population uses a streaming service in the United States. By all accounts the initial success of over the top subscription services like Sling, Directv Now, Hulu Live, and You Tube TV have not been able to offset the steep declines in pay television subscriptions. Very recently Comcast and ESPN / Disney have made it clear pay television is a declining business.
The fact that ESPN has opted to sell their content direct to consumer blows the door wide open for a radical change in the pay television space. A truly watershed moment. The big bundle of channels with ESPN and must have sports may soon disappear because you can buy the content direct for far less. $150 satellite and cable bills will struggle to exist due to direct to consumer offers from the leading networks that keep the prices so high. Customers at long last will be able to pay only for the content they watch.
The non sports skinny bundle has potential to further disrupt the TV landscape. A pay TV package without the sky high fees sports channels demand will help get customers to a price point they are more comfortable paying each month. A study from Beta research this week showed that 22% of adults named Food Network as their favorite channel while 21% named History channel. The other must have channels were primarily non sports channels - Investigation Discovery, ESPN, Discovery, AMC, History, Food Network, HGTV, and the National Geographic channel.
It seems all the major networks are going direct to consumer or will be soon. The CEO of CBS Les Moonves just said “We’re going direct to consumers. Over the top is going to get bigger and bigger—definitely right. Direct-to-consumer offerings are going to become a larger part of the world, as well as skinny bundles are going to players."
Netflix, Hulu, and You Tube have changed viewing habits for everyone, especially the Millennial generation. Consumers prefer on demand and control of their content. Watch what they want, when they want, how they want. The days of subsidizing channels and shows no one ever watches will thankfully be over soon.
The direct to consumer offerings from ESPN, Disney, CBS, and the new non sports skinny bundle from Discovery, Scripps, A&E, and Viacom all but guarantee big bundles and must carry channels cannot survive. The Elephant in the room everyone is afraid to talk about, A La Carte TV will be here before we know it.
