Business Insider exposes the Pay-TV markets diminishing value prop. Cable TV is shedding subscribers but this is not just due to pricing increases, and competition from Telco TV providers like AT&T and Verizon or OTT providers like Netflix or Aereo. With consumers watching much more video, spread across more devices and channels, Pay-TV’s core value may also be in decline.
Pay-TV providers and broadcast programmers look to offset revenue losses with programmatic buying and addressable advertising while slowly unleashing TV Everywhere and Network DVR. Cable MSO’s look towards industry consolidation to increase pricing leverage with content providers and advertisers while fending off Telco and Satellite TV providers who have better economics and margins. Scaling a problem may delay your stock from declining on the shorts but will not change the fundamentals of the marketplace.
If this sounds like a major marketing disconnect it is. The problem is not the Pay-TV distributors alone. TV advertisers and programmers also have to change their value proposition. Primetime rating trends highlight the archaic methods used for programming appointment TV, and tendency to utilize inexpensive reality programming, and/or increase the frequency of ads on TV to improve margins. As a result consumers are loosing interest in broadcast programing and finding limited value in the long tail of TV channels sticking to an average of 18 channels per month.
Consumers simply want better content, on demand, and on any device as part of a reasonably priced Pay-TV subscription package with a reasonable amount of advertising.
Programmers past strategies of investing in premium programming, more sports and news are relics of the past decade and will no longer work to fend of new competitors and embrace changing consumer values exhibited by cord cutters and cord never millennials.
Netflixs, commercial free subscription VOD and binge viewing rule the day while digital OTA broadcast, Aereo’s OTT Internet play, and declining ratings accelerate the downward pressures on traditional Pay TV providers.
Checkout some additional insights from Jim Edwards of Business Insider @ Cord Cutters And The Death Of TV