By 2014 you will have bought a new TV. Television is about to be revolutionized and you’re going to love where it’s going. Anyone who pays their cable bill knows they are ridiculously high. The model is bust. Yes, subscribers are still currently sticking to it, but in the wrong demographic. The hot sub-24 year old bracket is not signing up and they’re largely satisfied with Hulu and Netflix (or other more mischievious sources). Apple and Google (and potentially Amazon and maybe even Facebook) are best positioned to turn the industry on its head. Could the model be an a la carte app subscription model?
Imagine a world where you can download your favorite network or cable channel’s app to your Apple / Google TV, tablet, or smartphone, pay a small monthly subscription and receive live and on-demand viewing on any device. No more DVR. No more crazy channel guides. No more insane cable bills. It’s simple. Content straight from the source.
And here’s the cool thing. It’s already happening. Bloomberg recently rolled out the free iPad Bloomberg TV app with live and on-demand viewing. You don’t have to stretch you imagination to see this on your TV.
This model benefits everyone except perhaps the cable companies. Consumers get greater choice with less waste. Honestly, how many of your 250 channels are you actually watching? Probably only a handful. Content creators win by being able to market directly to viewers and potentially enjoy greater revenues. A $4.99 monthly subscription beats the few cents they get from the cable companies for each subscriber. Apple / Google will win massively with what will probably be a 30% cut of the monthly subscription price.
The cable companies are aware of this threat and will fight to prevent it. Why else did Comcast buy NBC Universal? To control the content. Cable companies are the worst positioned in this equation and they’ll feel the pressure from declining cable subscribers and a heavier load on their data networks. They’ll also respond with tiered data pricing to offset their lost cable revenue. This is also already happening: see ATT Uverse.
And here’s the best part: an app-enabled TV landscape creates a flat-structure for content creators. It allows a relatively small YouTube channel to be on the same level as the giant network and cable channels. With funding, these new nimble outlets will be able to compete directly with the established players and become the networks of the 21st Century. And in case you think YouTube is about sneezing pandas, think again. Google is sinking big-bucks in its ambition to pump out high quality premium content.
Get ready for the TV revolution. It’s about to get very interesting.
A recent Bloomberg Businessweek article gives some fascinating clues of what some of the music industry’s biggest names think of Spotify.
Adele, Coldplay, The Black Keys, Tom Waits and others, are playing hard-to-get with the subscription services and not streaming their latest albums. Why? They’re worried that they will loose money on digital downloads. This ironic twist shows just how badly the industry is still scrambling to figure out their business model. 2011 saw digital downloads finally overtake physical album sales, and consequently the artist’s amnesia has caused them to forget that little over a year ago they were still vilifying downloads. It appears that the enemy is whatever technology forces them to change, which now seems to be streaming.
Alas, such short-sightedness is typical in the entertainment industry. The studios, networks, record labels and now the artists would rather hang on to whatever forms of media distribution are currently making a buck, rather than embrace innovative models as the new profit drivers. Just as the studios are playing tough-guy with Netflix to save the last few cents coming out of their precious DVD / Blu-ray sales (Honestly now! You’re still focusing on physical media?!), the artists are now withholding their latest wares from the streaming services to protect digital downloads.
Come on artists. Can’t you see the seismic shifts happening across the media industry? And don’t you realize that perhaps the cause of the malaise in the music business is perhaps your unwillingness to swiftly adjust to new forms of consumption? Your audience is starting to move away from sales to subscription. It might take a couple of years for the numbers to show it, but unless you adjust your sails now we’ll soon hear you whining about how desperately you’re trying to save streaming from whatever new model is in vogue. Have some courage because the more content you all make available to stream, the bigger your audience will be, and the more zeros you’ll see on your paycheck.
End of sermon.