I’m a huge fan of Mark Cuban, and his blog – Blog Maverick. I’ve known Mark for ages, and he’s smarter and more thoughtful than almost anyone commenting on the emerging video, Internet, HD, cable world. Yet I sometimes disagree with him.
I left him a comment on his blog, over his latest post insisting that the multi-channel cable world will continue, mostly intact, in an IP world. He was inspired by a comment made by Boxee CEO Avner Ronen, on a panel that we both sat on – where I was even more cable-negative than Avner!
I disagree with Mark’s assertions. Here’s the comment I left on his blog, for your consideration. Read his post, and then check this out – and remember that I’m a content person, but also an Internet person, with of course no guarantees that I’m not stupid.
I always go back to what customers want. The average consumer watches something like 15 different channels. they don’t want, nor do they need, all the other 485 channels that are delivered to them in a multi-channel world. At $50 a month, that works out to more than $3 a channel.
$3, interestingly enough, is about what ESPN gets for every household that gets its channel – which is just about everyone. I love ESPN, but I really don’t need Hallmark, FoxNews, Animal Planet, or many, many other channels I currently support via affiliate fees.
Many of my customers, and employees, are the RipCord generation – they have canceled cable and use a combination of legal and illegal services to get the programming they want. And they want traditional media
(along with our stuff at Revision3, but web-only isn’t going to dominate the video-viewing world anytime soon – it’s a good adjunct and expansion… but I digress).
I often ask these cable cutters what they would pay for an Internet-delivered service that gave them 15 of the top channels that THEY want, and it is usually around $10 to $15 a month. That pays to eliminate the hassles, and also to let them watch those specials and other programs that aren’t always on Torrent, at least not regularly.
So forget 500 channels for $50. What if we could deliver them 15 channels. ANY 15 channels, for $10-$15 a month. They pick. ESPN would eat up $3, but I’ll bet most of the others would be far, far less.
It’s still a “bundled” world, but the consumer chooses the bundle. Want a movie bundle? Another $5 gets you Starz, etc. or maybe you give them another $5 and they can pick and choose ANYTHING they want, drag and drop channels into their TV window, until they hit the $5 number.
AND, here’s where it gets interesting. Give them the ability to swap out any or all of their channels each month. Food getting boring? Replace it with Discovery. Current no longer, well, relevant? Replace with OLN.
Bundles are nice. But they are nice for the established way we do business now, which is a technology constrained world – ie there are only so many channels that can fit in a 750mhz pipe, or on a 24-transponder satellite.
The Internet eliminates those constraints. And thus business models built on that artificial scarcity will have to change.
Feel free to comment here, or on Mark’s blog directly.
I pay $72.00 for my internet alone and $220.00 for my Directv package! where as netflix is only $8. The cable package is going to be cancelled at the end of the year. I am definitely switching how I watch tv. Thanks so much for the tips and information.
Good reading. We dropped cable about 7 years ago and initially, we used a very nice network tuner which beams free OTA channels through the home. It also has DVR capability, Jeopardy! must not be missed. Then, through a series of fortunate circumstance, we group share one or more of the pay to stream services with family. We also discovered that through our cellular network, we could get another company’s service as part of the cellular company’s partnering. We spend less than 10% of what the cable bill used to be. We have really improved our lives but not watching some of the utter rubbish we used to pay for. I will never go back.