Surprise: TV networks are already unbundling from cable

string generic

HBO is never going to unbundle, except when it is: Executives of the premium cable network have long insisted that they won’t offer its HBO Go streaming service as a Netflix-like standalone internet subscription in the U.S. But HBO is already running an internet-only service in northern Europe, and it’s now looking to take that proposition to other countries, including possibly Japan and Turkey, according to a recent Wall Street Journal report.

HBO isn’t the only network that’s been testing the waters on internet-based video services. A number of broadcast and cable networks have been looking online for new opportunities, and many of them see the internet as a way to break out of pay TV’s stranglehold.

News and horror, made for online audiences

Take AMC for example. I got a lot of flack when I suggested in May that AMC may be in a prime position to pull the plug and become the first network that successfully turned into an online subscription service. Little did I know at the time that a month later, AMC would announce that it has teamed up with online video startup DramaFever to launch at least two niche online video subscription services. The still-unnamed sites won’t replace AMC’s cable channel, but the horror-focused service sure could be a hit with a subset of the Walking Dead’s audience.

Al Jazeera’s AJ+ venture is another example. The Qatar-based news organization took some heat from online video fans last summer when it had to block most of its YouTube videos in order to get carriage deals for its Al Jazeera America network. Al Jazeera responded with AJ+, a new online-exclusive news network that targets young viewers who don’t watch cable news anymore and who are more interested in explainer content than constant rehashes of the last news update. AJ+ hasn’t officially launched yet, but the team behind it has been busy producing YouTube videos for the AJ+ Labs YouTube channel and has seen six-digit play counts for some of its videos on the war in Gaza.

[youtube=http://www.youtube.com/watch?v=SByMn7wJ-gE]

Who wants bundles, anyway?

The thing to understand about pay TV is that it’s not a black-and-white world. Small cable networks have different interests than big broadcasters, and even the term “bundle” means something different to everyone involved. For example, many consumers that are being charged $100 a month for a big bundle of cable channels — whether they watch them or not — would like nothing more than pick and chose the few channels that actually matter to them instead.

Pay TV operators like the idea of billing consumers for bundles because it’s much easier to sell one product at a set price than dozens of products at widely varying price points, but companies like Cablevision would also like to pick and chose to offer bundles only consisting of the most popular channels. Media companies like Viacom, on the other hand, demand that TV operators carry their entire bundle of channels. That’s why your cable bundle includes channels like VH1 Classic; hardly anyone watches it, but your cable company needs to carry it in order to also get the much more popular Comedy Central.

Pay TV operators and cable networks occasionally fight around the pricing of these bundles, but in the end, operators agree to carry and pay for everything, often in exchange for some sort of exclusivity. That’s why networks have less and less content available online, and why more and more catch-up content is restricted to people who pay for cable.

Networks agree to these restrictions because cable and satellite companies pay them good money for their channels, but that doesn’t mean they like them. Many feel that it restricts their ability to experiment with online business models, which is why they’re now increasingly looking at ways to unbundle some content on their own without running afoul of their contractual agreements.

Expats and niche sports fans already watch outside of the bundle

One of these strategies is to launch separate online properties for new or niche audiences, just like Al Jazeera and AMC are doing now. Another is to have time-limited online properties around events or seasonal themes, something that’s also known as a pop-up channel. NBC has been doing this for a few years now with the Tour de France, which it offers to all viewers, without the need for a pay TV subscription, but for a fee.

Increasingly, this is also being used for other sports events. Carribean sportscaster SportsMax recently sold soccer fans a $15 online-only subscription package to the World Cup. Cleeng CEO Gilles Domartini, whose company helped SportsMax to set up the billing infrastructure for this pop-up subscription, told me that he is seeing a lot of interest from broadcasters to launch similar packages around other sports events that are big in some markets, but have smaller audiences in other countries. Rugby, for example, or handball.

The other big unbundling opportunity may be going abroad. Dormatini told me that there is a lot of buzz in emerging markets where broadcasters often have huge audiences abroad. “There are more Chinese people outside of China then there are French people in the world,” he said. So why not sell these expats online-only subscription packages?

Germany's ProSiebenSat.1 is just the latest broadcaster to sell online subscriptions to its programming abroad.

Germany’s ProSiebenSat.1 is just the latest broadcaster to sell online subscriptions to its programming abroad.

Cleeng is already helping French pay TV channel Canal+ to stream to online subscribers in Canada, and just last week, German TV giant ProSiebenSat.1 announced that it is now selling subscription to linear and VOD content around the world. Dish is offering a number of international channels through its DishWorld online TV service, and others have started to target expat audiences with dedicated subscriptions and sometimes even their own branded streaming hardware.

Mix in online-only subscription services like Netflix that already offer a lot of network content up for binging, and free video sites like YouTube that host a number of channels owned and operated by TV industry insiders like Disney and Dreamworks, and you end up with an interesting scenario:  Consumers are increasingly consuming content outside of the traditional bundle — and more and more of that content is coming from the very networks that insist that the bundle is here to stay.

loading

Comments have been disabled for this post