Unbundling and a la carte were forbidden words in the traditional video world a few years ago. However, with DISH recently announcing its Sling TV streaming service, cable nets launching streaming options and a slew of online video providers changing the competitive space in video, unbundling and creating consumer-friendly TV packages are expected to happen sooner or later, speakers said at a CES panel Tuesday in Las Vegas.
Though the traditional cable programming bundle isn’t going away–at least not any time soon–the shift in consumers’ viewing habits and the increasing availability of content are driving the unbundling trend. “People are not following networks or Netflix. They are following content,” said Detavio Samuels, president of One Solution, a cross-platform marketing initiative of TV One and Radio One. For example, BET was the channel for the African American audience a year ago. Now, there are networks like TV One, Bravo and numerous others that are targeting the African American audience, Samuels said. “You might watch ‘Game of Thrones’ on HBO, but you might not watch other HBO programming,” said Evan Young, general manager of content, application and advertising at TiVo.
“People always want to be entertained. That’s not going away,” said Michael Goodman, director of digital media strategies at Strategy Analytics. “People are still watching television programming, just on different platforms and in different time periods. As long as companies produce quality content, consumers will find it and watch it.”
Even if networks are cool with the idea, how does the economic model work for unbundling? The answer is advertising, “the only real opportunity” to make up for the lost revenue from unbundling, according to Jeffrey Binder, CEO at Layer3TV. Several speakers agreed, saying that skinny programming bundles have the advantage of delivering much more targeted advertising messages. Goodman seemed less bullish. Using the music streaming service Spotify as an example, he said that while the ad-supported service draws a large number of users, it hasn’t been able to generate enough revenues on ads. Other similar services have been pushing back on free ad-supported services and pushing hard on subscription services, he said.
A potential solution to solve the economic problem of unbundling could be capping programming fees that distributors are paying to content companies, several speakers said. Even if SVOD players like Netflix are able to get good licensing deals now, content acquisition costs would eventually go up, according to Goodman. His prediction: Netflix won’t be $10 a month a couple years from now. It will be $20 or even more.