[Editor's Note: Dashiell Reinhardt is the Partner and Head of Post Production at Happy Little Guillotine Studios, one of the web's first and most successful creative agencies and production houses. Reinhardt has been on the front lines of digital production and advertising for the better part of the last decade and has an incredible amount of fantastic thoughts on the industries. Here he is sharing a few of them.]
I’ve been receiving a reoccurring call from TimeWarner Cable for a while now. It goes a little something like this:
TimeWarner: Hello is this Das…squirrel?
Me: Sure, let’s go with that.
TimeWarner: Hi, we’ve noticed you’re subscribed to our broadband service but not our cable or phone services. We have a deal we think you’d be interested in.
Me: No thanks.
TimeWarner: Well, may we ask who you’re with?
Me: Who I’m… no one, just don’t need them.
Me: Yup, fine with just the internet.
TimeWarner: (Piercing shriek of confusion and agony)
That last part wasn’t true. It was more of guttural howl.
Besides being particularly amusing, Time Warner calling with the desperation of a jealous ex-girlfriend is an indication to the state of current affairs in ye ole world of television. Cable companies have seen a steady decline in subscription rates over the last decade and have found themselves scrambling to gain new customers and hold on to existing ones. A task made more difficult knowing that “according to the FCC, the price for basic cable has grown by an average of 6.1% a year over the last 16 years. Three times the rate of inflation and far outpacing the average American’s paycheck. Cable bills are projected to continue rising to an average of $200 a month by 2020.”
Given such staggering raises in pricing, it’s no surprise that many have done away with their cable subscriptions altogether. Opting instead to rely on streaming services such as Netflix, Amazon, YouTube, Hulu and of course good old fashioned piracy. It’s an increasingly popular phenomenon in our generation, one that’s even earned a fancy media label: they are the “Cord Cutters”, and they’re sick and tired of paying for what they don’t want.
The wealth of online viewing options that have popped up over the last decade provide a path to the future of viewing. They are cheaper, more accessible, offer more user control, and they point out just how outdated the mandatory basic cable package has become. Like a sickly old dog that’s been a true and valued friend but is past its prime, it’s time to take it out to the pasture and shoot it in the face.
Traditional Television’s Impending Demise
Benjamin Swinburne, a Morgan Stanley analyst says “There has been a 50 percent collapse in broadcast TV audience ratings since 2002”.
So for those angry about absurdly high cable fees, now you know why. The steady decline in viewers is raising both advertising costs and subscription fees in an effort to keep revenues from dropping. But of course this is just driving consumers into the arms of cheaper alternatives. And these alternatives, such as the previously mentioned Netflix and YouTube, have also given rise to a new way in which we view our content.
Networks are losing views, advertisers are wasting money, cable companies are having to charge higher and higher subscription fees, and viewers are caught in the cross fire. It’s about time for a change.
We’re currently in something of a golden age of television. With shows like Breaking Bad, The Walking Dead, Game of Thrones, and a list that can just keep going and going there’s enough quality content that it’s often difficult to keep up.
But for each one of the amazing shows out there, there’s a flood of barely adequate drivel (to put it politely) to match. It’s content overkill pumped out by the ridiculous amount of channels that comes standard with a basic cable package. John McCain says in his article about reformatting cable, “the 82% of American households that subscribe to cable or satellite television are stuck paying escalating prices for ‘bundled’ packages of more than 100 channels, despite the fact that the average viewer tunes in to only about 18 of them.” Out of those 18 or so channels I’d imagine most only watch a fraction of the hours and hours of content being churned out. Not to mention if they want to watch any of the previously mentioned quality shows, they’re stuck paying extra for premium channels.
Basic cable is an overpriced and over cluttered mess. While the “cord cutters” are still a relatively small percentage of the viewer base (a recent Nielson report shows less then 5% of households are expected to shift away from conventional TV), they are an indication of a growing trend. That we as viewers want to watch what we want, when we want, and not have to pay for what we don’t.
The Tangled Web of Licensing and Distribution
Unfortunately there are a number of reasons basic cable is still clinging to life. When HBOGo was announced I was genuinely confused at their mandatory cable subscription requirement. Surely if they offered the option people would swarm to a monthly subscription to the service on it’s own. I certainly would.
But of course that’s not going to be happening any time soon. HBO’s parent company happens to be TimeWarner. The network relies heavily on the revenue it gains from its licensing deals. Offering HBOGo free of these deals could see lowered profits and hurt preexisting relationships. Although apparently the idea of packaging HBOGo with a broadband subscription at additional cost is being tossed around.
Mandatory package deals have allowed for both media and revenue control. The current system and its deals between networks and cable companies are keeping many a channel alive that would otherwise be pushing daisies. Channels such as The Golf Network and FOX Business Network, which see relatively low ratings, are still around because they’re safely tied into a package deal.
Change means risk and despite its declining state, sticking with the current model offers the least risk and the most reward. Even so, the cracks in the foundation are beginning to form.
The Streaming Winds of Change
There’s little denying that change is coming. A prime example being Netflix’s attempt to distance itself from the traditional model with its highly successful original series House of Cards. The company gambled on its consumers wanting to view a new series just as they viewed the already existing content on its service. Releasing all episodes in one go.
It was a bold and highly successful move and it demonstrated that viewers are more than open to new methods of distribution. The high influx of new Netflix subscribers after the series’ release also showed that viewers were willing to pay for specific high quality content. Undoubtedly networks have taken note.
The success of House of Cards is proof that even the concept of the weekly release is becoming outdated. Viewers are growing more accustomed to the ease and accessibility of streaming content and it won’t be long before cable companies are forced to adapt.
Of course change doesn’t come easy in an industry as large as television. Moving towards new methods of distribution will set into motion some potentially wild fluctuations in content and pricing as networks struggle to keep control of their content and viewer bases. If cable offers a system in which its viewers can customize their own packages, made up of the channels and series they select (please?), all those basic cable channels no one is watching will die out.
Services such as Hulu and Netflix are on the rise but are also still at the mercy of the owners of the series they distribute. If Networks make a move to start offering their own streaming services, the current generation of online streaming services could find themselves without anything to show. A large part of the reason Netflix made a move to establish itself as a creator of original content.
In addition high quality streaming seems poised to inevitably kill off hard copy media. Without the revenue of DVD sales networks will need to rethink distribution and pricing of their content. Another reason to pull rights from other distributors and keep content close to home. As networks move to play it safe in the face of potential revenue loss, many shows could see lowered production value and cancellation.
Ideally the overall focus will become less on creating a flood of non-stop content and more on creating specific quality shows that draw an audience. Less series, that are of higher quality but have shorter seasons and bigger breaks between releases.
We may even see a golden age for independent creators as networks seek cheap yet quality content. Think Louie and It’s Always Sunny but more frequent. As an owner of a production company that produces original independent content it’s an exciting prospect.
It may be a rocky start, but I bet it won’t be long before networks are forced to adapt to the times and television and online viewing become one. A system allowing you access to entire catalogs of content at blazing fast streaming speeds. Where you choose what channels and series you want to purchase and aren’t forced into package deals. Where you can watch on your computer/tablet/phone the same shows you watch on your television and vice versa and you choose what you pay for at a reasonable price.
What you want to watch, when and how you want to watch it.
Happy Little Guillotine Studios, an award-winning digital production house and creative agency, has created and produced everything from the Slurpee Unity Tour (winner of the PRO Campaign of the Year award) that garnered an unprecedented 2 billion media impressions — to Leap Year, a scripted Hulu series funded by Hiscox Insurance that received millions of views. Their mission statement is simple: use the digital genre to create compelling stories for fans and clients alike.