Content owners and TV networks which have launched direct-to-consumer SVoD services, are finding it challenging to sell subscriptions on their own, according to executives speaking at CES. Some of these networks are now trying to pivot back towards distribution partners to boost subscriber numbers.
Today, most of the main TV networks and content owners have SVoD products in the market – though they aren’t all doing very well. Going direct to consumer is a big shift for TV networks that have operated largely as B2B organizations. Networks have been faced with building out not only the technology stacks needed for operating an OTT service, but also the customer relations and billing systems that are required for video service retail, according to execs from Scripps and Starz at CES.
“You launch a business, you kind of dip your toe in the water and you realize pretty quickly that a partner would help,” said Turner’s EVP of distribution and strategic partnerships, Jennifer Mirgorod, speaking at CES. Mirgorod touted the company’s talks with pay TV provider Verizon and others for distributing its SVoD OTT services. Turner has launched two SVoD services, art film service Filmstruck and cartoon service Boomerang, and there are rumors that it has new OTT services for CNN, TNT and TBS in the works.
Turner and other TV networks which have struck out on their own via direct-to-consumer offerings have been forced to balance content consumption shifts with protecting the core MVPD business. Turner CEO John Martin seems to believe that the company can build a stool out of three content model legs: pay TV distribution, virtual MVPD distribution, and direct-to-consumer distribution.
The problem is that those three legs are often at odds with one another and compete against each other. The current blackout spat between Starz and Altice indicates that direct-to-consumer launches have helped to sour relations between content owners and their traditional distributors. Altice has refused to pay Starz’ price hikes, pointing to its SVoD service. Dish Network pulled a similar stunt last year with CBS and its’ All Access OTT service.
Pay TV providers are of course looking to evolve their offerings, too, and have spent many a dollar on new experimental products like Verizon’s Go90, or Comcast’s Stream TV offering, in the hope of landing a win. Most of those offerings have failed to hit the mark, and have not resonated as strongly with consumers as Netflix, Amazon or even Hulu — which has recently risen from the ashes of its subscription-plus-ads model with a live TV offering that’s grown its subscriber base 41% over the last two years.
Turner’s Verizon mention at CES is interesting as Verizon is reportedly working on a new streaming pay TV service, due sometime this spring. The new service will include standalone apps for content verticals such as sports, news, and entertainment, making the service a mix of Amazon Channels and Sling TV’s tiered offering. Turner has already partnered with Amazon to participate in Amazon’s Channels programs, which lets viewers assemble their own streaming app “bundles” by subscribing to services like HBO Now, Starz, Showtime and others.
Dish Network, meanwhile, is trying to capitalize on its position as pre-eminent straddle of the OTT and pay TV worlds. Dish launched a new business division at CES, called Dish Alliance Group, which is aimed at facilitating partnerships between Dish and broadband service providers. It promises to help broadband providers increase sales and raise ARPU by offering broadband customers Dish video services – including Sling TV – and by connecting existing Dish and Sling TV subs with local ISPs.
Some executives voiced concern that the deluge of OTT services coming from pay TV networks is only serving to worsen conditions as audiences continue to fragment and TV’s reach continues to shrink. Consumers, however, seem to love the new entertainment ecosystem. TiVo’s Digitalsmiths research has tracked the consumer opinions on a la carte TV, a utopian future in which consumers can pick and choose which channels they want to pay for and watch. Year after year, the number of consumers who want this option has increased.
From the consumer’s perspective, as more silo’d services get folded into home entertainment options, there’s little opportunity for cross-app content searches or recommendations. That’s given OTT device providers like Roku and Amazon an opportunity to add value to consumers as an OTT aggregator, and has allowed them to gain important market share as a result.
The burden now falls on pay TV providers to realize their job is not to compete with the likes of Netflix, but instead to offer Netflix, and Starz, and Showtime, and all the other SVoD services, in new and innovative packages that link broadband, OTT and a universal programming guide that helps consumers find what they want to watch. The elusive universal EPG isn’t a hot topic anymore, but that doesn’t mean it isn’t still sorely needed. Pay TV providers seem to have skipped over it, rather than lean in. Perhaps with the new broadband regulatory environment in the US, pay TV providers will finally get it right.