It’s clear the current business models for TV won’t last much longer. The internet, particularly as it gets faster, provides a much better method of delivering video content to an audience. The concept of a piece of content only being available at a specific day and time before it disappears in a puff of radio waves already seems ridiculous.
But those dying models work, economically. We either pay for the TV we watch with advertising space, or with a monthly fee for cable. What we’ve done very little of is pay for an individual series – at least, one we haven’t seen yet. Buying individual shows won’t ever work at a large enough scale.
Doom-sayers believe the rampant piracy through mechanisms like BitTorrent show that people aren’t willing to pay for content. These people miss the reason people pirate.
The bottom line is, price aside, piracy has provided the best user experience. Once you get past its initial complexities, you can get the content you want in a timely manner, and watch it when and how you like. Current commercial models have been unable to compete with this.
But a lot of people aren’t watching long form content online at all – their online video experience is limited to cat videos on YouTube. This is because of the current gap in many homes between the internet and the big TV sitting in the lounge room. Who wants to watch an episode of Homeland sitting at their laptop? And who on earth would pay for that?
What the hell do we do, then?
Other markets have shown that if you get the user experience right, people will happily pay. The success of Steam, the iOS App Store, and the Amazon Kindle are excellent examples.
The question becomes, what is the magic combination of:
- the right user experience
- a pricing structure that users will accept
- a revenue level that makes creation of content sustainable
Old dog, new tricks?
I believe the answer lies in shifting the existing cable TV model into a new user experience.
While free to air networks in the US are struggling, the cable networks are doing pretty well. This is because their business model rests on smaller, niche audiences. If a free-to-air show gets a million viewers in primetime, that’s a disaster. If a cable show gets a million viewers in primetime, it’s paid for itself. Some shows that would have been highly successful on cable, died on free-to-air.
People won’t pay for individual shows – but they will pay for cable. It’s because it offers them choice. People don’t want to lock themselves in to paying for a particular show, but they’ll happily pay to have access to a group of shows, and bet on a big enough proportion of them being entertaining.
That brings us to the second reason people pay for cable – curated choice. People get HBO because they know they’ll get damn good adult drama. People get SyFy because they want science fiction. People get the Lifestyle Food Network because they like watching people cook things.
There’s so much content available now – from cable to free-to-air to YouTube – that audiences struggle with choice. Cable networks deal with that through their natural process of curation. They’ve already thinned the herd to find the best content that fits their library.
The cable model already provides the money, the content, and the curation of that content. But how do we move it online?
Old dog fails
Currently, cable networks have been coming up with their own streaming solutions. The results are crap, because getting user interfaces right is hard, and it’s not what cable networks are good at. Most of them have terrible interfaces people hate using. And even when they’re not too bad, they’re all completely different, making the process of watching a show convoluted. Can I get that network through the hardware I have? Which box plugged in to my TV do I use now? And which app?
There’s no simple one way to just watch some TV, like you have with broadcast. That’s what users want. A single, simple interface for browsing and watching all the content they have access to.
But cable networks don’t want to give up all their content to someone else’s brand. They don’t want people associating their shows with Apple or Microsoft. Cable networks are their content. HBO is annoyingly protective of their shows, but it ultimately makes sense. If people don’t realise the content they love comes from HBO, why would they bother paying for HBO?
Hey, what’s that new dog doing?
Let’s look at Netflix for a moment. They’re doing insanely well. People streaming Netflix make up over 30% of primetime internet traffic in the US. They’ve created a user experience people love, and a working business model to back it up. They’ve put themselves on every bit of hardware they can – from Xboxes to Apple TV’s to televisions themselves. They’ve made it easy for people to get watching in the place people want to watch stuff – the lounge room.
They’ve also moved from just collecting existing content to creating their own, with shows like House of Cards and the new season of Arrested Development.
But there are problems with Netflix’s approach. They don’t charge very much, meaning original content is rather unsustainable. They often don’t get key content people want (such as Game of Thrones), or they get it much later, due to cable networks protecting themselves. And despite Netflix’s recommendation engine, it’s a big vat of content that is difficult to wade through.
New dog, meet old dog
I believe there’s a solution that could work for everyone.
Netflix is currently acting like both a platform (delivering content with a good user experience) and a network (creating content like House of Cards).
They need to split these two things up. Let’s call them Netflix and Netflix Originals (a term they use for their own content already).
Netflix could offer their platform at a base monthly fee with their existing archive included, and Netflix Originals thrown in as their first network. Users could then pay to subscribe to other networks to be delivered through the Netflix platform.
Content from a network could be very clearly marked as such. When you’re watching Game of Thrones, it’s clearly branded as from HBO, in both the interface and the video itself. The latter already happens with HBO content through their distinctive static animation we all know so well.
This means users just pay for the kinds of content they want, not one big subscription fee for a lot of content they don’t. Through the one, simple interface, they can access all the content they’re paying for. But they can still narrow it down to a particular network within that interface, so when they’re in the mood for some complex adult drama, they can head straight to the heavily branded HBO section.
Of course, the big issue is that it’s entirely reliant on Netflix as a platform. But it doesn’t have to be – Netflix is just the example.
Who let the dogs out?
Once we’re distinguishing between platform and network, it shouldn’t matter which platform you’re using. You could be paying HBO for you subscription directly, then access that subscription through Netflix, or Apple TV, or Lovefilm, or an Xbox. We could have a virtual equivalent of the cableCARD system – allowing subscribers to access the content they’re paying for through whatever platform makes most sense for them.
It leaves us in a great market position, for everyone. Platform creators are competing on user experience. Networks are competing on content, and not having to worry about creating user interfaces. Users are happily paying their subscription fees to the platforms and networks they use, as they’re getting the best possible user experience. Which means the networks have the funds to create more content, and hopefully the content people actually want.
Of course, it would take a lot of wrangling to get such a system to happen. But the technical side is relatively simple. It’s just about getting the business deals right. Given such a system would be good for everyone, the optimist in me hopes that’s possible.