4 Comments

Summary:

WealthTV announced that its live video feed will soon be available to Roku users for $2.99 a month. While the announcement is a big win for Roku, it also underscores the need for independent cable networks to seek alternative methods of distribution beyond just cable TV.

tv apps

Independent cable network WealthTV has announced it will enable Roku users to subscribe to live s on-demand feeds of its content for $2.99 a month, marking the first time a cable network is making its content available through the over-the-top streaming box. That’s a huge win for Roku, which has been trying to expand the amount of content available on its hardware devices. But the news also speaks to the need for niche cable networks to expand the availability of their programming beyond the traditional cable distributors.

WealthTV has distribution through some pay TV services, such as Charter Cable, AT&T U-verse and Verizon FiOS, reaching more than 11 million households. That’s not a lot, compared to big cable networks like USA, FX or TBS; in fact, that’s only about 10 percent of all cable households in the U.S. Notably missing from WealthTV’s distribution outlets are big cable and satellite providers like Comcast, Time Warner Cable, Dish Network and DirecTV.

Part of the reason WealthTV isn’t carried by major pay TV providers is that independents have difficulty gaining a presence and negotiating per-subscriber fees for their content, unlike major media companies that package multiple cable networks together when negotiating carriage fees. When Disney renegotiated its carriage deal with Time Warner Cable, for instance, it introduced a new channel — Disney Junior — to the cable system, as well as adding video-on-demand content from ABC and Disney. WealthTV and other networks like it don’t have that kind of leverage.

And while independent cable networks have a hard time just getting added to cable lineups, they also find that they may be the first to go when distributors have to make difficult choices about where to put their programming spend. Crown Media Holdings saw its Hallmark Channel and Hallmark Movie Channel dropped from AT&T’s U-verse earlier this year, after the two couldn’t reach a new agreement. As carriage fees for networks from major media companies like Disney, NBC Universal and News Corp. continue to increase, we’re likely to see even more independent networks squeezed out.

For independents like WealthTV, putting an app on a Roku box is one way it can secure new viewers and new revenues without having to negotiate deals with a cable provider. Not just that, but at $2.99 a month, it’s getting a much higher per-subscriber fee than it would be able to get from Comcast or Time Warner Cable. And by going direct to the consumer, WealthTV is also ensuring that those who choose to pay are engaged, interested viewers — not just those that might stop momentarily on one of its shows while channel-surfing.

That said, building a business based on TV apps won’t be easy. For one thing, the market is incredibly fragmented. WealthTV likely wants to build apps, not just for Roku, but for other connected devices as well, which takes time and development resources. Since each consumer electronics maker has its own app platform or software development kit (SDK), content owners are forced to rebuild their user interfaces for whichever new device they want to reach.

The market for TV apps is also incredibly small. Roku has sold just a million set-top boxes so far. While that’s a major accomplishment for a streaming startup, it also means that — compared to the 100 million cable households in the country — there’s a limited number of users that might actually want to subscribe to WealthTV’s video streams.

It’s still early days, and we expect the TV app market to take off soon. With the help of large online publishers like Netflix and the BBC, it could also begin to adopt standards, making it easier for independent publishers to reach a larger number of users without rebuilding apps over and over. Until then, however, first movers like WealthTV may find themselves disappointed by the actual number of users that subscribe to their new, over-the-top services.

Related content on GigaOM Pro: (subscription required)

  1. It is an interesting strategy and I agree with the challenges you laid out. It seems like an ad supported web distribution strategy would be simpler. Their affluent target audience would probably command higher than average CPM rates. Also, I wonder what the revenue split is with Roku. Either way it is great to see a content creator have the ability to reach their audience without the cooperation of the monopolistic distributors.

    Share
  2. This article lays out nicely the problem that many independent networks face, specifically the bundling of channels that programmers present when renegotiating deals with cable/satellite companies. Both parties are at fault, but it’s the main reason why an a la carte model in the traditional cable world will be very difficult to introduce.

    Having said that, the app model is also one with many hurdles that need to be overcome. Infrastructure being one of them. If someone has a problem with their service, who do they call, Roku? Wealth TV? Also, who is managing billing, customer service, etc? Marketing also plays a bigger role because every month that subscriber is making that decision to resubscribe at the $2.99 price. The value of that purchase needs to be constantly reinforced so they continue to subscribe.

    Share
  3. [...] the only media company to find its way onto Roku devices; last month independent cable network WealthTV announced that it would make live and on-demand streams of its content available to Roku users for a monthly [...]

    Share
  4. [...] providers to tap into Apple TV’s live capabilities. For instance, independent cable network Wealth TV recently launched an app for Roku that will let its users subscribe to the networks without cable. And Al-Jazeera English, which [...]

    Share

Comments have been disabled for this post