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IHS Research reports that US pay-TV subs are being lost to Netflix users and other OTT providers. This is always an eye catching headline in our sector, and I confidently predict it will rise close to the top of our most-read parade in coming days.
However, like a lot of similar reports, it is a bit of a “Small Earthquake not many dead” story. A quarterly loss of over 300,000 subs seems a lot until you consider the vastness of the existing market and, as IHS allows, it is probably as attributable to belt tightening as to Netflix, or anything else.
But the keener competition for subs definitely does put providers more on their toes. No decent cable operator can afford to look, or act, like a utility supplier any more. For free most providers have worked hard on Everywhere provision but they also realise that if viewers think it’s ‘6,400 channels and nothing on’ putting that vacuum on ten more screens doesn’t help.
So, Content is all the rage. Original content, spectacular content, quirky content. If you can prove viewer appeal you can name your terms. Many American pay channels and their European equivalents have significantly upped their budgets and their games in TV drama and a focus on better writing and less star vehicles (as a way to keep costs down) has generally paid dividends.
However, the way the chips are falling is leading to an increasing ghettoisation of content, particularly if no heavyweight public broadcaster is in the mix. Ad supported channels need event TV to fight ad hopping so are swamped with reality shows and ‘talent’ competitions. Premium channels bring the drama and comedy (most FTA channels have given up on sitcoms – though sadly this doesn’t always mean they stop making them), and super premiums bring the movies and sport.
Increasingly sport is the number one driver, and the ever-spiralling costs of rights jeopardises the renaissance in TV drama for the traditional pay-channels. Sport carries pay-TV into the home, its priority outranks all else and the extra cash needed has to come from somewhere. Of course, this may be an opportunity for Netflix et al; they will stay out of the sports arena and focus on drama where a dollar can go a lot further (though only if you keep up your hits ratio). But in cash strapped households how will the fight between sports versus TV ‘with something on’ come out? The cord and its longevity will hang by such questions.