Who's In Charge of What You Watch... You Are - Steve Yanovsky - MediaBizBloggers

A recent article in The Wall Street Journaldiscussed the new Amazon subscription service that will deliver TV shows and movies over the Internet. This is now one more company that is trying to control what we watch in our living rooms or bedrooms. This subscription service rivals those introduced by Netflix and Google Inc. These and others have clearly declared war on the cable television and satellite providers.

The interesting consideration as this battle begins to unfold is the discussions that took place in the cable television industry in the mid 1990's. The discussion, or concern, focused on a la carte subscriptions for cable subscribers. That is, you would only pay for the networks you wanted. So, if there were secondary and tertiary networks on your channel carriage that you never watched, had no interest in watching, you didn't have to pay for them. Cable operators only had to pay programmers for the actual number of sub's that took the channel and subscribers had a much lower bill than they had originally. It would be a win-win.

But, since basic channels live on two revenue streams, sub fees and ad sales, they were terrified. Under this scenario, their sub fees would be much smaller because viewers only paid for the channels they watched, and MSO's only paid for the actual number of subscribers taking a channel. Also, with substantially smaller universes, programmers could only charge for the actual number of subscribers taking a channel, not the total number of sub's an MSO had.

Pretty frightening numbers if you were a cable programmer looking at smaller audiences. In fact, the second Quarter of 2010 experienced the first reported decline in pay TV subscribers for the video providers. This can be turning of the tide as we consumers have so many other ways to enjoy the same video content.

As we know this idea never came to be, as cable subscribers we do not have the freedom to pay for only the channels we choose. But, we may get there through a whole selection of alternative video providers. The ones mentioned above are just the beginning. Apple is working on a device that streams Internet video directly to television sets, so it has been reported.

Unlike Apple, Netflix and Google, the large media companies are caught in an unenviable position. They are wary of encouraging a shift to web based viewing, as it can lead to consumers eliminating their cable subscriptions, and therefore the sub fees they enjoy for their cable net's. Quite a high wire act. Hulu, owned by three of these media companies, has launched a premium service for $10 a month. Will this complement television viewing or replace it? Now that Hulu is charging it will be interesting to see what happens.

So, the idea that video on demand, and a la carte programming choices are coming, have come, is an exciting one. The consumer will finally be in charge of what they watch, when they watch it and how much they have to pay for it. Marketers, and their agencies, will have to figure out how to get in front of these independent viewers in ways that still have meaningful scale.

Steve Yanovsky, a marketing and marcom consultant with Customer Focused Solutions, can be reached at steve@stevenyanovsky.com.

Read all Steve’s MediaBizBloggers commentaries at Steve Yanovsky - MediaBizBloggers.

Check us out on Facebook at MediaBizBloggers.com
Follow our Twitter updates @MediaBizBlogger