I previously wrote about (at this link) the current bubble of original scripted programming on television and how it must burst at some point and also how the spaghetti-against-the-wall approach we are seeing from the networks looking for the next Walking Dead, Game of Thrones, Sons of Anarchy, etc. could hasten the bursting of that bubble (more on that at this link). And now (in this long-delayed follow-up) I will take a look at how the television medium itself is changing and will almost certainly take on a new look in the next five years or so.
Over the past ten to fifteen years, we have seen major changes in how people watch episodic television as DVRs and internet streaming have risen in popularity and now represent a major portion of how television is consumed. And this has continued to make the old model, where the fate of television shows is dictated by the Nielsen ratings, increasingly more archaic and unrepresentative. Because of this, the funding model for television production has continued to adjust with the times as shows have become less reliant upon advertising revenue (the price of which is heavily influenced by the Nielsens) and more on partnerships with international channels and financers as well as partnerships with the streaming services like Amazon and Hulu.
In addition to the decline of advertising driven-programming, consumers are increasingly demanding more choices on which stations they watch and they are showing an increased resistance to the bundle approach that has dominated the cable and satellite services since their inception. Efforts have been ongoing in Congress to force these providers to offer a la carte options, frustrated by the fact that the very same congressional leaders have backed the outdated model for all too long. But as little progress has been made on this front, the market has offered its own solutions and I believe that one or more of the newer models available today suggests the direction that television viewing will follow.
Here is a look at several of the models that I believe will eventually replace the old, advertising-driven, bundle-dominated means of watching television:
The Netflix Model – This is a subscription-based streaming service that offers movies, prior seasons of network/cable shows, and its own original programming, all commercial free. Were this model to take precedence, the networks would essentially become studios leasing out their shows for a specified amount of time or on a revolving basis.
The Amazon Instant Streaming Model – This is basically the same as Netflix with the exception that movie streams can also be purchased or rented and television shows can be purchased on a per episode or full season basis. That’s an important feature because I believe the purchasing of episodes/seasons will become a more important factor in the years to come (more on that in my discussion on pre-funding).
The Hulu Model – This is similar to the Netflix model except that the streams of television shows and movies include commercials (though not as many as the live broadcast on the network). Hulu has also partnered with many of the networks to offer up to five of the most recent episodes of a show for streaming and sometimes they have entire prior seasons available as well.
The Roku Model – This is the model that I believe should be the wave of the future because it combines all three above plus many, many more channels. You purchase the Roku viewing device (typically in the $50-$100 range) and then subscribe to the channels you want to watch a la carte. Some of these are free (Crackle, for example) and some you pay per month (the above three channels mentioned and many more). And these channels are either the pick-what-watch-variety or live streams. In this model, the networks would simply offer subscriptions to their channels which could be free if they include commercials or perhaps they could offer a commercial-free option as a premium service. Apple TV, Amazon Fire TV, and Google Chromecast are all variations on this, though Roku is the most platform independent. I personally could survive with Roku and subscriptions to the three services above. Those run around $30 a month total, and considering that cable/satellite bills average over $100 a month, you could subscribe to three additional shows a month through Amazon and still come in around the same price or lower on your monthly TV costs.
Internet TV – The technology exists for this, but there hasn’t been a strong push in this direction. In this model, your television would essentially work as a web browser and you would go to a network’s website (or the Netflix, Amazon, Hulu, etc. sites) to view their shows. You can do this today, but it is rather clunky, and essentially Roku is doing the same thing (it works across your internet as well) with a better interface. If a good interface was created for internet TVs, this might be more palatable, but I believe that Roku and its competitors already have too much of a jump on this.
There are more potential models as well, but the ones above currently have the head start and I believe the future of television will combine these with maybe a few more features (and again, the Roku model is already the most advanced in that direction).
The one thing that these models don’t allow for as well, though, is passive viewing. That’s the channel surfing that us guys love to do to find something that’s just on as opposed to selecting a program that we want to sit down and watch. Essentially, when I go to Netflix or Hulu or wherever to choose a to watch a show, then I am usually committing to sitting down and watching for an episode or more. When I am channel surfing across the cable/satellite selections, I am typically looking for something to vegetate to for a bit, but my commitment to watching that in full is not quite as strong. I believe that this still represents a significant portion of television viewing and I will go into it in more detail with the next post in this series (which will be up in the next week or two).