If you read a lot about the television industry, you can’t help but be aware of the hallelujah chorus proclaiming the death of the TV “bundle”, the pre-set group of networks that MVPDs offer to consumers at various price points.
These articles inevitably have a graphic that points out the high price of ESPN and how people who don’t watch sports are paying a couple of extra dollars a month for a service they don’t want or need.
One problem with their argument (and there are several) is that while people say they only want to pay for the dozen or so channels they watch, actually identifying those channels is a lot harder than it sounds, especially if it means giving up hundreds of other options.
There’s also the fact that the networks aren’t lying: the bundle really does make economic sense, the savings allowed by having larger networks subsidize smaller ones actually do wind up being fairly substantial and the total savings from so-called “skinny bundles” aren’t that great and it can feel as if you’re losing access to 80% of the programming just to save 20% on your cable bill.
But those are just minor factors.
The bundle as we know it is about to change rather dramatically because TV is about to change rather dramatically. Over the next 18 to 36 months, it will go from a primarily linear medium to a primarily library-based one, a change that’s both inevitable and beneficial for everyone involved.
This is not to say that linear TV will disappear entirely. There will still be news and sports and event shows (e.g. Oscars) that happen in real time. Networks will be able to premiere new episodes of series at specific days and times every week. What will change however, is that all that filler, all those shows that have already run, either an hour earlier or a decade earlier, will now be available on an On Demand basis.
The transformation begins with the program guide.
For years now, we’ve been predicting the introduction of a recommendation-based program guide as a replacement for the traditional linear grid, and finally, it looks like Hulu’s new pay-TV service will be the first instance of it. Their recommendation-based interface will also be personalized, making it infinitely more user friendly and—this is the revolutionary part—it will not start with the premise of “what is on TV now” but rather, will ask, “what do you want to watch now?”
“What do you want to watch now?” That’s an incredibly radical thought for an industry that has long told you what you had to watch and when, and the ramifications are significant. For one, it means that TV is no longer primarily a linear medium, but rather a library-based one.
As such, there’s no need for networks to purchase all that filler to ensure they can have something “on air” 24/7/365. Which means networks will be fine producing somewhere between 10 to 40 hours of original programming each week. That should be more than enough for most viewers, and when it’s not, the networks will be able to offer selections from Netflix-like libraries of older series they have the rights to, along with previous episodes of current series.
The shift to a recommendation-based library system means the MVPDs can expand the library of programming they have on offer too, taking on short-form series from digital publishers like Buzzfeed and Vox, along with popular creator videos from YouTube. It’s a win all around—digital publishers get access to new audiences and new revenue streams, while MVPDs get a cut of the ad revenue for the minimal cost of some server space.
So then where does that leave the bundle?
While the actual details may vary, chances are high we will wind up with a business model that keeps most elements of the current system in place, only with access to seemingly unlimited amounts of programming choices. Add in the introduction of MVPD TV Everywhere apps that finally offer the same options as the set top box, and you’ve got a system that’s evolved to meet the needs of today’s viewer in a way that works for just about everyone.
On a practical level, that means that in this new world, the high-end Platinum bundle might give viewers access to the entire libraries of 500 different cable and broadcast networks, plus premium cable (HBO et al) and premium streaming (Netflix, Amazon and Hulu) plus everything in the MVPD’s library of short form content. The less expensive Bronze bundle, OTOH, might only give them access to the libraries of the broadcast and “basic cable” networks, along with some of the top digital publishers, with streaming and premium available as add-ons.
The great unknown in this world is monetization, as it means advertising will need to lean heavily on new technologies like real-time digital ad insertion and addressable advertising. The effect this will have on the current system, which still relies on networks selling the bulk of their ad inventory months in advance during the a period known as the upfronts will be significant. But given that no other medium offers the reach and engagement of TV, these changes, though radical, should prove to be easily surmountable as new pricing models built around addressable, along with a greater presence for native advertising and branded content will work to fill in the gap.
For the viewer, the progression will seem like an evolution rather than a revolution, as it’s nothing they haven’t already seen before. As noted in my book, Over The Top. How The Internet Is (Slowly But Surely) Changing The Television Industry, we’ve reached a post-ownership stage in regards to media, where all content is available whenever and wherever the viewer wants it, all for a monthly subscription fee. It’s time that TV finally joined the fray.