1. AT&T Numbers More About Cord Shifting Than Cord Cutting

Nothing gets clicks like a good “Cord Cutting!!!” headline and the tech trades did not disappoint today, reporting on AT&T’s recent numbers as proof that the much anticipated death of television was nigh.

Only it’s not.

You see, while AT&T did indeed lose 390,000 Direct TV and Uverse subscribers as per today’s SEC filing, they also added 300,000 Direct TV Now subscribers, for a net loss of 90,000 subscribers out of around 25 million. (That’s about 0.35% if you’re doing the math.)

Why It Matters

If a viewer is paying AT&T for the right to watch pay television, we’re not really sure how that’s cord cutting.  It’s more like cord shifting, something we’re likely to see a lot more of, as viewers realize they don’t watch all that much linear TV and shift towards digital packages with reduced channel loads that work on all their devices, not just the ones attached to the hated set top box.

But the thing is, AT&T and the other MVPDs are all actively participating in this switch. Their subscribers are switching to their vMVPD services because they're selling it to them. So if we’re going to call the MVPDs out on anything, it should be the notion that the vMVPD market consists of the 10-20 million people who don’t currently have pay TV. Reality says that a lot of the new vMVPD viewers are going to be people switching from a set top box based system, people who want a better interface and more ways to watch.

Now since the MVPDs make less money off of vMPVD customers, watch for them to try and make up that lost revenue via higher broadband fees. And for them to try and disguise some of that pain by increasing speeds along with prices, moving people from 25 or 50 mbps to 1G and beyond.

As we’ve previously discussed, the advantages to vMVPDs are numerous, chief among them they provide a sort of TV Everywhere (TVE) functionality, and that the absence of TVE is a big part of what makes traditional MVPD set top box service seem stuck in 1997.

What You Need To Do About It

If you’re an MVPD, you need to get your PR team up to speed on the whole “cord shifting” thing and make sure they get out in front of things before the media starts talking about how you’re the latest victim of the cord cutting plague. (And if you don’t care about PR, you might care about Wall Street, as they’ve been sending MVPD stocks south on the AT&T news.)

If you’re a network, or a big network group to be exact, you’ve got a trickier job—you need to figure out how to unbundle. That may not be as difficult as it sounds—mostly you need to figure out which of your smaller networks would be fine as VOD-only networks, producing 10-15 hours of content a week and then make sure you’re marketing them hard so as to draw in the niche audiences they appeal to.

If you’re an advertiser, you’ve also got a tricky job—you’ve got to figure out how to balance your ad dollars between linear and time-shifted viewing and between set top box-based and digital based. (For legal reasons largely having to do with unions, commercial loads on linear broadcasts on vMVPDs are different than linear broadcasts on MVPDs, even on the same network.) You also want to look at more accurate measurement options for TV, especially ACR. (Look out for the TV[R]EV reports on ACR, due out later this month.)

 

2. Tubi Makes A Wise Hire

As part of our mission to make Silicon Valley realize the importance of hiring people with actual Hollywood experience for TV programming jobs (go Apple!), we want to give a polite round of applause today to Tubi for hiring Adam Lewinson as Chief Content Officer. Lewinson’s resume includes stints at Crackle, FX, LIfetime, Disney and Sony Pictures, which means he gets television and gets what goes into making a hit show. While ad-supported OTT services like Tubi make us fear that we’re headed to the two-tier world we call “Fifteen Thousand Merits” (after the Black Mirror episode), where people who can afford to will pay to opt out of ever seeing advertising, we admire what they’re doing and applaud them for making a wise hiring choice.

Why It Matters

When House of Cards became a hit for Netflix, they made a very, very big deal over how they used data to decide to invest in that show. While there’s likely some truth to that, they also had Ted Sarandos in there and he knew enough to understand that a series that had been a hit in the UK, with a big star and big name director attached to it, that had strong interest from HBO, was probably a good bet. So more so than data, they relied on the usual things programming executives rely on, only backed up with data.

Many of the Silicon Valley players seem to think they can rely on data exclusively and avoid gut instincts altogether. Which is why they avoid hiring people with actual programming experience and wind up with shows nobody wants to watch.

Picking programming for TV is as much an art as it is a science and companies that realize that will find themselves in a much better place than those who don’t. 

What You Need To Do About It

This one’s pretty simple: If you’re a company whose roots are not in the television industry, then you need to hire people who understand television if you want to succeed. We get that finding someone who is open to new ways of doing things  but still knows what goes into making a hit show isn’t always easy, but they’re out there, so keep looking.