Cable Bytes the Dust
The bundle is dead, long live the next bundle
It is upon us now. You no longer have to squint to see the end of cable. Disney and Charter may have resolved their dispute, but whereas the devil usually resides in the details, this time it was right there in the headlines. The power has shifted and everyone knows it.
Obviously, cable television isn’t going to die overnight. In fact, it’s very likely to linger for a long while, perhaps decades. But increasingly, it will be much like the way AOL still has dial-up subscribers. Speaking of, the transition has some elements that remind me of another transition: when we all stopped caring about phone minutes and just started caring about data. After all, at the end of the day, it’s all data.
With cable, the story is the same. Both the television and internet elements that travel through the tubes are also just all data. All just bytes traversing the same pipes. Much like phone lines carried voice first as the only feature, we figured out a way to squeeze data through those cords — both on landlines and cellular lines! Cable initially only carried video signals, but now it’s all kinds of information. And the cable players have successfully made that transition, so they care less and less about the old video signals. It’s just another data stream, and one that was increasingly expensive for them to pay for thanks to carriage fees. Largely the content from Disney in particular. And largely ESPN even more in particular.¹
But by the end of this dispute, both Charter and Disney were pushing the OTT streaming cable services. Services like YouTube TV, which are great and one of the key nails in the cable coffin. But I’m also not sure how long such services actually last. The price increases have been coming faster than they ever did with cable, and you have to wonder when either the math no longer works for consumers and/or the players here lose interest. You’d think YouTube wouldn’t given the NFL Sunday Ticket deal they just grabbed — but we’ve all seen this story play out before. If they can’t make the bottom line work — we’ll see how long they play.
Anyway, for now, that’s the solution. But ultimately, we’re going to head back right where we started: with bundles. But they won’t be bundles of video channels, they’ll be bundles of video services. The strongest player will stand-alone: Netflix. The loss-leader players will stand-alone for as long as it suits their businesses: Amazon and Apple. And Disney will likely have their own mini-bundle business with Disney+, ESPN, and Hulu until they sell and/or spin-off one or more of those. Everything else is going to have to bundle with others. Discovery’s Max service, bland re-branding aside, is probably the strongest non-Netflix player right now, but they’re also clearly in the bottom-line business under David Zaslav. They’ll bundle (or spearhead a bundle) when the timing and the deal makes sense.
That perhaps points to a world we see in the shorter term. Smaller bundles pushed by the stronger players. Disney, as mentioned, has their own and perhaps they convince some others to ride with them. Max will probably take on some riders. Netflix will think they can go it alone, and maybe they can, but there will be pressure to partner up at some point — mainly because there will be money on the table for the taking. In this world, you pay for Netflix, you pay for Max, and you pay for Disney. You get Prime Video because you have Amazon Prime. And you get Apple TV+ because you have some Apple device and/or service. The others that you may pay for now are a part of one of those bundles. And then you perhaps pay for a streaming cable service, in particular if you care about news and/or sports. But those will all shift over time as well.
Ultimately, what we need — we already need it! — is some unified UI to make all of this service jumping usable. The smaller bundles will help, but you’re still going to need a way to know which bit of content is on which service, when. A “TV Guide” for streaming, as it were. There have been a number of services trying to fulfill this for a while, but such a service needs to reside where the content is being watched. Otherwise, most people are just going to Google it. And that’s just not a great experience — certainly not lean back!
I continue to think that, sadly, it’s going to have to be one of the big players who convinces the content providers to let them surface content in a better way. I would have bet on Apple — for some of Steve Jobs’ apparent last words, if nothing else — but now that Apple is full-on in the content game, there’s conflict there. Same with Amazon. So perhaps it’s Samsung or LG or one of the TV makers.² Or Roku?³ More likely, it’s a few players who each have their own UI for such unification. Netflix is the one who won’t allow for this right now. Eventually, they may be enticed — perhaps by a payment, much like the one the cable players were paying to Disney for ESPN…
This all sounds like a mess. And it will be. But it’s all happening right before our eyes. Because nothing lasts. The cable television bundle was a good deal for everyone until it wasn’t for anyone — gradually, then suddenly. Ultimately, it’s all data. Just bytes traveling through cables.⁴
¹ Tangential, but related to all of this: sports rights.
² Though basically everyone has their own content to some degree these days. Even if it’s just weird, almost ambient channels included on the TV.
³ What if Netflix were to acquire Roku — which started as a project spun out of Netflix, of course…
⁴ And eventually here, we will move to much of this being delivered over the air, I imagine — a throw back to OG antenna TV! And then those players — including, perhaps, Starlink and Amazon’s forthcoming Kuiper system — will have a say in all of the above. Round and round we’ll go.
