Maybe It’s Not The Size of the Bundle After All
BRaVe Ventures

Welcome to content retailing, TV.

In their article, Jesse and company at BRaVE venture spoke of the elephant in the producer’s hot tub:

“What if the last thing that’s bugging them is too many channels? What if their main pain point is being forced to adhere to a linear schedule and sit through 8 minutes of commercials every time they watch a 30 minute show? What if all they really want is maximum a la carteness, the ability to pick and choose shows, not networks.”

Well, of course…but there’s a later part of the article that states:

“Because all VOD, all the time, is where the future is headed. It means bye-bye DVRs and the ability to skip commercials.”

Hmm. Unskippable commercials. Like Hulu+ and the various iterations of aVOD that make up the smallest part of the OTT VOD landscape.

Why does this vision persist? Because the interruption-based marketer looks to the future and they fantasize about being able to deliver the right message to the right audience at the right time with ultra-personalized 1:1 dynamic ad insertions that can’t be skipped, so we get back to a familiar measurement paridigm of an ad “having the opportunity to be viewed” like when New York TV had channels 2,4,5,7,9, and 11 (and PBS 13) and then things will get back to normal.

Yeah, right.

The meaningful audience growth in lean-back VOD is via commerical-free sVOD and tVOD with some EST thrown in there too (and with YouTube being the platypus of content monetezation models that throws exceptions left and right). More importantly, video content distribution is being pushed into a retail model, not the wholesale/sharecropper model we have today.

The “revolution” that is happening right now is that the dual-stream model of ad sales and broadcast rights is capsizing, and what’s replacing it is something that two companies that have never made more than a 5% net margin(Amzn and NFLX) are perfectly fine with: content as a low-margin, high volume retail product (or, in Apple’s case, Content as a loss leader to sell hardware). More importantly, as retailers, they don’t really think about “bundles” of content in any meaningful sense. A show is another SKU in the catalog. Do you want fries with your “Walking Dead” season? How about a nice set of knives? Its all about overt, aggressive selling of your show, finding your audience and only then, maybe a short ad, before, at (sometimes) just after the transaction — but never openly in the program (clumsy product placement aside) and certainly not by interrupting the prgram.

It’s all about the transaction, and in that model, shows need to work harder to find their audience, market themselves and start thinking show-level ARPU, not GRP or DRP or whatever cargo-cult mechanism comes along to mimic the old model.