Charter’s Secret Weapon, Amazon’s Aniston Sweater Play

1.  Charter’s Secret Weapon

There is really only one thing you need to know about the Charter-Disney battle. And that is that Charter makes the vast bulk of its income from selling broadband and mobile. Not cable TV packages.

Meaning they probably don’t care all that much about losing Disney or people cutting the TV cord. 

Those cord cutters still need broadband—higher speed broadband, in fact, and at some point Charter will likely be able to get them hooked on some sort of streaming bundle—say four services for forty bucks for the first year, plus every FAST ever.

Disney, OTOH, is playing with fire. 

Whatever dwindling carriage and retrans fees Charter pays them over the next few years is still going to be millions more than the subscription and advertising revenue they’ll get by moving everything to streaming.

Meaning that golden goose still has a few years worth of eggs in her.

Why It Matters

In Q2 2023, Charter lost 189,000 cable TV subscribers, bringing that total down to 14.1 million. 

In that same period though, they managed to add 77,000 broadband subscribers, bringing that total up to 30.6 million.

30.6 million broadband subscribers vs 14.1 million pay TV subscribers.

Let that sink in.

Digging deeper, in the first half of 2023, Charter’s internet revenue rose by 4.0% and its mobile revenue rose by 29.1%, while its pay TV revenue dropped by 6.6%. 

Now that mobile number is due to Charter bundling internet and mobile in their Spectrum One package. 11% of broadband customers are now taking them up on it, largely, one can surmise, due to the very attractive 12 month introductory rate of just $49.99. 

But still, it’s a revenue source that is not pay TV.

Which is not to say they make nothing from pay TV, it’s just that they’re not as reliant on it as it may seem.

And that they can likely replicate some, if not most, of that revenue by creating streaming-only bundles,

That said, it should be noted that Charter, like other cable providers, is facing increased competition for broadband over the next few years, so their dominance is far from a slam dunk. 

5G fixed internet to the home and stepped-up efforts by the telcos have both raised the specter that the days of unlimited cable broadband growth and unlimited “make up for our shrinking pay TV numbers by increasing our broadband fees” plays may be coming to an end.

So there’s that too.

What You Need To Do About It

If you are Bob Iger, realize that the money you make from Charter and other cable companies is probably worth holding on to for the next few years. There are still a whole lot of people who like cable TV and who have no interest in streaming, either because they are technophobic or because they really, really like cable.

If you are Charter, remember that people are going to blame you for the impasse, not Disney— (it seems they already are.) 

People don’t like cable companies, don’t like the bills they are paying and as they cut one cord, it may be easy for them to cut the other and hook up with a different broadband provider, especially if that provider is offering a much better deal.

Just something to think about.

If you are a Charter subscriber and you’re missing ESPN badly, remember there are always the vMVPDs - Hulu Live TV, Fubo, Sling and YouTube are but a click away.

Finally, if you are a subscription streaming service, especially one that offers an ad-supported tier, the bundle can be a great thing—locking people in for a year is a great way to reduce churn.

So if Charter and other companies approach you, it’s well worth taking a meeting to see what’s what.

The bundle is dead. Long live the bundle!.

2. Amazon’s Aniston Sweater Play

Pause on an episode of Citadel, Amazon’s new Richard Madden/Priyanka Chopra Jonas spy thriller, and you will see Jennifer Aniston’s Sweater.

Not her actual sweater, but the eponymous and seemingly mythical solution that allows viewers to buy what they see on TV.

In this case, it’s not Aniston’s sweater, but Chopra Jonas’s red dress, along with a range of Citadel-themed merchandise.

It happens in the much loved X-Ray feature of Prime, which traditionally has given you access to brief bios of the actors in each scene as well as some occasional background information on the show.

Once you've summoned X-Ray, you click on a box that says “Shop the Look” to buy the dress or “Shop the Store” to buy everything else. Clicking on those boxes takes you to a QR code that takes you directly to… the Amazon app on your phone, where you can make your purchases before resuming the show.

Granted, at $1,995.00, not many people are impulse buying Chopra Jonas’ red dress, least of all from Amazon, but the Citadel store has an array of more rationally priced items.

What’s significant though, is that Amazon has very quietly created a seamless shopping experience, one that is likely to significantly shake up the way TV is monetized in years to come.

Why It Matters

Amazon is not the only one to notice that we are now at the point where the Aniston Sweater Theory, aka Shoppable TV, is likely to become reality, as both technology and consumer behavior have caught up.

Companies like AiBUY and KERV are rolling out solutions that allow for this sort of functionality, which allows consumers to purchase a wide range of items they see in shows. More importantly, it allows the producers of those shows to take a role in the transaction, whether that is getting a cut of each sale, choosing the vendor who handles the transaction or working with brands from the start to better integrate them into the show.

It’s a much needed move at a time when traditional revenue sources like syndication are drying up and we can expect to see a whole lot more of it in the years to come. 

Amazon is the best test case for these solutions too, as it has a built-in fulfillment mechanism, a closed-loop ecosystem, and a vast wellspring of consumer trust to draw on.

There’s also Amazon’s unique place in the media ecosystem.

Amazon’s suite of TV products often seems like it exists on an alternate plane of reality from the rest of the industry.

To begin with, there are the subscriber numbers.

As in how many people subscribe to Prime for the video and how many subscribe for the free two-day delivery? (My suspicion is that for many people it’s a little of both and not an easy number to quantify.)

Then there’s Freevee, the FAST service formerly known as IMDbTV, which is so well-integrated into the Prime interface few people seem aware that it is a separate service, versus yet another option in Prime’s baffling and opaque melange of free and transactional offerings.

There’s also Channels, Amazon’s attempt to serve as a bundler for all of a viewer’s streaming subscriptions.

Finally, there’s FireTV, the Amazon device-slash-operating system, that has become its own ecosystem apart from Prime, with news channels and other FireTV-only apps.

It’s all designed to take advantage of the vast storehouse of data Amazon possesses about consumers and their buying habits that have allowed it to become an advertising powerhouse, just slightly behind Alphabet and Meta.

If this is surprising, it’s because Amazon’s retail media ads often look less like ads and more like helpful suggestions. Which means consumers aren’t quite as aware of them. Or quite as distrustful.

Combine that with what is likely to be a similar perception of shoppable content plays, and traditional TV commercials may actually face some real competition.

They won’t disappear—they are still valuable as a way to both target and educate consumers. But the growing popularity of shoppable ads in shows, coupled with the concurrent emergence of shoppable branded content, could take a good-sized bite out of traditional ad units' current dominance.

What You Need To Do About It

If you are a streaming service, network, studio, brand or agency, time to educate yourself about the potential of shoppable advertising. It’s a boon for both advertisers and platforms alike and can be used for products and services as well as packaged goods.

If you are a consumer, this is good news. Shoppable content won’t be obtrusive, meaning you will have to spend less time watching actual commercials. And you’ll be able to buy things you actually want, all from the comfort of your couch.