I had a lunch meeting with one of my MDs about three years ago and the subject eventually turned towards cable providers and what shows we watched. He was adamant about cancelling his contract with Comcast at the time because “the content isn’t any good and the customer service is horrible so I’d rather not deal with the headache. They told me I would need to return their equipment to a local retail location so I told them they had better send someone to get it or I’ll start charging them rent.” While that is a bit dramatic, the point here is trying to find out where the cable business goes from here.
Cable TV and internet providers consistently rank towards the top of the country’s least favorite companies and there are a lot of good reasons. With the change in availability of content, we are poised to see a dramatic shift if the current revenue models for sure.
Newsworthy within the last few weeks is Netflix releasing their own proprietary content in the form of shows like “House of Cards” among many others and everyone was saying how much of a game-changer this will be going forward. Here is a company that abandoned the “traditional” channels of signing on with a network and instead chose to produce and distribute the entire series all at once themselves, on their own platform. Upon hearing this, I was reminded about Radiohead releasing their own album, for free, online without the backing of a record label. While it was indeed offered for free, consumers were given the option to donate to the band, which they did in droves.
“Thom Yorke told TIME, "I like the people at our record company, but the time is at hand when you have to ask why anyone needs one. And, yes, it probably would give us some perverse pleasure to say 'F___ you' to this decaying business model." On Sunday night, guitarist Jonny Greenwood took to Radiohead's Dead Air Space blog and nonchalantly announced, "Hello everyone. Well, the new album is finished, and it's coming out in 10 days. We've called it In Rainbows. Love from us all."
It was reported approximately 38% opted to donate, with an average donation of $6. The rest decided not to pay a dime. This is, of course, only one example from 6 years ago.
More recently, Kevin Spacey was featured as a speaker at the Edinburgh Television Festival to call into question all of the major cable television companies and their current business models. His argument was centered around the premise that they should,
“Give people what they want, when they want it, in the form they want it in, at a reasonable price, and people will pay for it, rather than steal it.”
“It’s content. It’s just story. And the audience has spoken. They want stories. They’ll talk about it, binge on it, it on their bus to work, force it on their friends…” To me, these are very true words we’re seeing today.
He points to the story when he was originally pitching the idea for “House of Cards.” Every major network requested they write a pilot. Netflix said: “We ran the data and it tells us the audience will watch the series. We don’t need you to do a pilot..” 113 pilots made, 35 go to air, and 13 were renewed. Last year 146 pilots were made, 56 to series but the outcome is unknown. The cost of these pilots is $300-400mm per year, making his joke that Netflix’s deal for his show was pretty cost-effective.
People love stories more than anything. I, too, fall into this category since I look forward to Mad Men, Breaking Bad, Boardwalk Empire, and Suits every year. Just look at the recent thread on Suits on this very site for evidence that people get passionate about these series in a way that you never hear about with feature blockbusters anymore.
With the rise in digital forms of content and the myriad of devices for people to consume, there is a dramatic shift in the industry that hasn't been seen since the birth of the television, then the rise of the internet in every household. The question becomes though, where to go from here?
Mark Cuban has been an outspoken voice on the smart TV, where live television and social interaction with those events are another frontier for consumers. Sure, that’s all well and good but that still factors in you’ll need a provider like Fios or Comcast. Has anyone made the move completely off the cable provider invoice sheets and strictly streams media? Any regrets? Is it like those Vonage commercials about being rid of the phone companies for good? I have to say I’ve been tempted to try but just haven’t pulled the trigger just yet but I’m close.
What do you guys think? Where does the cable television industry go from here? What are the pitfalls and how can we get the consumer back in the driver’s seat?
I’ll finish with a quote Spacey closed the speech with, from the late Orson Welles: “I hate television. I hate it just as much as peanuts. But I just can’t stop eating peanuts.”