As TV critics often remind us, we’re living in a second Golden Age of television. It’s an exciting era in which writers and producers, now freed from the constraints of the major networks thanks to the proliferation of TV channels, online distribution options and independent production companies, are taking risks and serving up innovative content. Inspired by HBO’s wildly popular mobster series, The Sopranos, a new generation of producers began offering critically acclaimed fare like Breaking Bad and Mad Men. And now, series like Orange Is the New Black and House of Cards are making waves via subscription streaming services.
This revolution in content production has been largely driven and enabled by a sea change in how consumers access programming. The first wave came as the proliferation of TV channels available via cable/satellite/telco subscriptions. The second wave is the on-demand availability of content through streaming services like Amazon Prime, Hulu Plus and Netflix, powered by over-the-top devices like Roku, Apple TV, Amazon Fire TV and gaming consoles like Xbox. Standalone niche networks that are available 24/7 in a channel format via apps and online – like the Tennis Channel and WWE Network – are also part of this wave.
The on-demand component is important to today’s consumers, especially Millennials and Generation Z, who have come to expect access to content on multiple devices whenever and wherever they want it. Cable networks have gotten the message.
Most offer on-demand programming and while HBO plans to launch a stand-alone streaming service next year, none have the generous terms of services like Netflix. This growing availability of streaming services, combined with restrictions on content access and high prices of the cable/satellite/telco providers, have given rise to the “cord cutter” phenomenon, in which some consumers ditch their cable/satellite/telco service altogether, watching local TV with old-fashioned antennas and streaming content to meet the rest of their entertainment needs.
This phenomenon is occurring because, while the technology infrastructure to deliver ubiquitous on-demand content is largely in place, revenue models haven’t kept up with technological advances and consumer preferences. This disconnect will drive massive changes in programming delivery in the coming years. Niche networks like the Tennis Channel will continue to operate independently and more will spring up to attract viewers with high-quality content delivered outside the traditional platforms. Cable/satellite/telco companies will continue to make a play for consumer loyalty by offering “TV everywhere” packages and will increasingly explore “cable your way” bundles where viewers can select the programming they want to see.
Ultimately, a true à la carte model is likely to emerge—a system that comes closer to viewers paying content owners directly for access to their programming. Under such a model, viewers could choose a programming and data package that includes the Big Four networks, plus ESPN for the sports enthusiasts and a few other channels, then round out the mix with Netflix, Hulu Plus or Amazon Prime for on-demand streaming.
This type of arrangement would make sense for viewers, who would finally be paying only for services they actually use and value. And, with new content monetization solutions like live linear streaming, live ad insertion and video-on-demand syndication, a workable revenue model is emerging for more and more content owners, too, including niche networks. Maybe by finally rationalizing programming delivery, à la carte models will spark television’s third Golden Age.
Matt Smith, the author of this post, is Chief Evangelist at Anvato