The TV Industry’s Dumbest Problem
The television industry currently suffers from perhaps one of the dumbest problems in all of commerce.
In a world in which there are few greater goals in business than being able to sell more goods and services to more people for more money, TV networks who are quite frankly desperate to recoup revenues lost to cord-cutting, are unwilling and unable to sell their product to millions of consumers that are not just willing, but eager to pay them for it.
It has to end.
Just ask media investors, whose concerns over cord-cutting and the long term viability of major entertainment companies has many times sent their stocks tumbling by double-digit percentages.
The Problem at Its Source
There’s a consensus that the media industry is facing challenges, and thus far, have not reacted particularly well to them. The source of the problem is the loss of subscribers on which these companies depend, to the phenomena of cord-cutting, cord-shaving, and the disinterest of cord-nevers in traditional pay-TV.
As the rate of customers exiting the market accelerates, while the rate of new incoming customers slows dramatically, pay-TV has been hemorrhaging subscribers. What may seem like a problem primarily for the TV providers: cable and satellite companies, each of whom shed subscribers every quarter, is actually a bigger issue for the TV networks, who are hardest hit.
If Comcast, Dish Network, Verizon, and Cablevision each lose 100,000 subscribers in a quarter, a TV network like ESPN loses 400,000.
These losses at the TV providers may seem out of the network’s control. After all, who can blame customers for wanting to be rid of Comcast or AT&T?
But therein lies the stupidity of the problem. A customer that wants to be rid of Comcast doesn’t necessarily want to be rid of ESPN or Comedy Central or the other channels that they enjoy.
What’s even more confounding than the fact that big TV networks are losing subscribers, while customers who want to subscribe to them are left unable to do so, is that those customers are often willing to pay even more for them.
Outside of half a dozen channels or so, the rest command a per-subscriber fee of less than $1 per month. If customers could select and pay for just the channels they wanted, many would be willing to pay between $1 and $3 for them. Potentially more than double the revenue of a cable subscriber!
In addition to bringing in more revenue per subscriber, offering a standalone channel provides the opportunity to bring in new customers as well. If the networks are worried that subscribers will leave cable for à la carte TV, those same subscribers may already be planning to leave cable period. So offering channels à la carte simply becomes a question of whether they continue generating revenue for the networks, or whether they don’t.
Cable Bundles: A Double-Edged Sword
The networks like cable bundles, because they consider the guaranteed revenues. Even better, they get the revenue for all of their channels, whether subscribers ever watch them or not. Viacom for example, can count on their monthly fee for MTV, MTV2, VH1, Nickelodeon, Nick Jr, Comedy Central, BET, CMT, and more, from every subscriber. They see nearly a dozen fees as better than one, obviously.
Unfortunately, that makes cable bundles an all or nothing proposition. And increasingly, consumers are opting for nothing over taking and paying for a dozen unwanted channels along with each one or two that they like. That trend only seems likely to continue.
Simply keeping the status quo isn’t an option. Cable is trending downward, so there are likely more people with cable subscriptions today than there will be at any point in the future unless something major shakes up the media industry.
Rather than letting all of those subscribers go from producing some amount of revenue for the networks, to producing none, there is another option. In a best case scenario, networks are able to make more money selling channels à la carte. In the worst case scenario, they lose less revenue than they would had they taken no action amid continued cord-cutting.
For networks, breaking out of the cable bundle is easier said than done, because it means that they’ll need a new way to distribute these à la carte channels.
Even creating a simple website can become quite an investment, because they also need to develop the back-end infrastructure to process payments and keep track of users. To even inform users that such a site exists could take a multi-million-dollar marketing effort.
Fortunately, this is a problem that’s already taken care of. Consumers have been clamoring for à la carte TV for years now. Some have already cut the cord, and others are simply waiting for the opportunity to do so, but either way, they represent a massive audience that’s already lined up and ready to purchase individual channels when they are made available.
Having planned for this, Orlando-based startup FreeCast in particular is positioned to take maximum advantage of this situation. The company has already attracted millions of subscribers with its online entertainment offering, most of whom are indeed the very same cord-cutters, cord-shavers, and cord-nevers that would be eager to subscribe to à la carte channels.
With an agnostic media aggregation platform, designed to be easy for networks to plug into, the company’s services promise to be able to reach millions more, as the trend towards online TV continues.
FreeCast is capable of connecting those would-be customers with those networks that need the new subscribers. FreeCast collects payment, acquires users, manages subscriptions and pay-per-view purchases, measures audiences, markets their services, and more.
The networks need do little more than say “yes” for their dumbest problem to be solved. With minimal time or money wasted on developing a product of their own, FreeCast will allow their content to reach millions of new subscribers. Without any of the hassle, or really even any effort, the networks can receive a check and a report, each month; newfound revenues and valuable data that they’d miss out on entirely otherwise.
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