Jan 21

Thoughts On The Future of Media Consumption OR Cord Cutters Are Cheap And Will Never Get Their Way

Much has been said about HBO becoming its own standalone streaming service; how much people would be willing to pay, the economics behind it, why it won’t work, and the real demand for it. Others have foreseen it as the tipping point to the future where consumers view all TV shows online.

I looked for speculation regarding what this future would look like but I could not find much. However, my theory is that cable bundles would actually be cheaper.  TV media consumers want an a la carte system where they want a cheaper plan where they choose what channels they get. Unfortunately, big cable companies do not currently offer this and I doubt they have plans to offer it anytime soon.

The future of TV media consumption in my mind can go one of two ways.

The first option, which many people dream of before they consider the logistics and implications, is to pay the network/cable channel monthly to stream their content online.  The negative side of it this is that if you are pay the network directly and subscribe to a family of networks, the cost adds up to the equivalent of a current cable bill but you receive much less.

For example, if AMC offered a direct subscription service to access their network’s  (AMC, IFC, Sundance Channel and We TV) TV shows I imagine the subscription fee would be $12-$15 a month. Tthey could easily charge more depending on their own market research and logistical costs.  You add in FX (which would include FX and FXX) subscription of $12-$15 as well, and HBO would probably be much more a month, $20-$30, on the high end of my estimated figures, you would pay approximately $60 per month for these subscriptions.

Now before you attack my estimations for being unrealistic or too high consider the following.  Networks such as FX, AMC, and HBO would have to create a new department to service its new subscribers and a marketing department to make sure people know about said plans, tasks that are currently handled by the cable companies. If you think these networks would be able to keep the big budgets of their TV shows and take on these logistical tasks for any less a month, you should work for these networks and tell them how $10 a month or less would work in this suggested distributing model. With the huge subsidies they receive from big cable companies and few logistics they have in terms of distribution and marketing their network, the monthly fees I suggest are somewhat realistic.

The second option for future TV consumptions  is that cable companies will bundle access with broadband internet plans. Comcast and Time Warner dabble in this by offering HBO Go access with internet broadband packages that include local channels. They are at least willing to work with cord cutters who want HBO but not a full cable package. My thinking is this will expand to include access to shows and movies on channels on AMC and FX. The relationship that has been established between channels and cable providers is not one that will be easily severed by channels selling directly to consumers.

I am aware that HBO offers HBO Go directly to consumers in Norway and Denmark for roughly $14 USD a month, but that is a different market with different expectations and people who think differently. When you look at it more closely it is not just HBO content on HBO Nordic, they also have access to shows in the US on Starz and SYFY. Therefore, there may be more going on behind the scenes of HBO Nordic then we may be able to convey.

I could be wrong completely and tomorrow HBO could announce HBO Go subscriptions to its consumers but it is unlikely given all the factors. Of the 105 million people in America who have cable subscriptions (including broadband) in their homes only 3 million of those are broadband only with no TV package. 30 million people subscribe to HBO in America.  HBO has probably crunched the numbers and figured that they would not  gain enough subscribers compared to how many they would lose if they went to a standalone service when you consider some cable and satellite systems may drop HBO as an option on their systems. As the cry for more TV-streaming increases  I am  sure other networks have done similar number crunching.