Oct 24, 2013

Once They've Seen Paris: A Revolutionary Proposal For The TV Industry

Once you’ve gotten used to watching television without advertising, it’s really hard to go back.

That’s something the industry hasn’t really come to terms with yet, the fact that they’ve been training a whole generation (and many of its elders) to studiously avoid the very thing they use to pay the bills. It’s like having a dull ache in your leg for years and then suddenly finding a pill that makes it go away. It wasn’t life-altering pain, but once it’s gone, you realize how much better you feel without it and there’s no way you’re ever going to put up with it again.

I was thinking about this while listening to the Netflix earnings call on Tuesday. For 8 dollars a month, they’re able to make hundreds of millions of dollars a year off subscriber fees alone. And no commercials. Ever.

But how many networks are there that we’d pay 8 dollars a month for? I suspect not that many. Maybe 5 or 10 at most. The rest we could live without: we mostly watch them because they’re free or we’re bored or because they have one particular show we like. The rest is just a flyover zone, the channels you pass through when clicking from NBC to Showtime.

So here’s a radical thought: what if we turned the whole paradigm around? What if we made ad supported TV the back-up option and subscription services the premier one?

Take the CBS series Under The Dome which premiered this summer on Monday nights, with multiple commercial breaks, on CBS and then resurfaced on Fridays on Amazon, commercial free.

What if the process was reversed and the Monday night broadcast was on a service called CBS Prime that you paid $8/month to subscribe to and where you got to watch Under The Dome and other CBS series ad-free?

Viewers who didn’t sign up for CBS Prime would get to watch the show five days later for free, only with the usual eight minutes worth of advertising thrown in.

This would create two strong reasons for fans to subscribe to CBS Prime (early access and no commercials) and would still allow the show to build audience with remaining viewers, some of whom might like the show enough to sign up for CBS Prime. It would also place pressure on the networks to improve the quality of their programming so that viewers would want to sign up for the prime versions.

There are potential downsides to this maneuver: affluent audiences might just default to the ad-free services and be lost to advertisers forever (though I’d argue that this is more or less happening already, thanks to streaming, VOD and DVR.)

The industry would also be forced to admit that an ad-supported model is an inferior model and risk losing ad revenue (though again, you can argue that this is already the case with apps and it’s not hurting mobile ad revenue. Plus TV advertising still has incredible reach and services like AdTonik that tie TV spots to mobile ads can help extend that reach, while also hitting affluent audiences.)

The biggest downside would be that the Prime system would only work for a dozen networks at most and that would create a more transparent two-tier system. On the other hand, if costs were low enough and a niche network had a small-but-extremely-loyal following, the Prime system could work for them as well.

How it would work is also open for discussion: the most logical move would be an HBO-style service with a preset linear schedule, though there’s also an argument to be made for a pure VOD service that had much of the network's library already on it (ad-free) and where each new episode would be available for download at noon Eastern time on Mondays. A Netflix-style system where all episodes were released at once is also possible, though spoilers might serve to disincentivize weekly viewers.)

Given the results of Piksel's recent Binge Viewing Survey, that showed many viewers are no longer watching their favorite shows live (and thus presumably watching them without commercials) a shift in emphasis to align TV with the rest of the entertainment industry, where the free/ad-supported model is not the premium model, could go a long way to keeping those viewers happy and keep them from leaving the pay TV ecosystem. It’s a major paradigm shift, but it’s one that could work to the advantage of all parties involved.

Viewers in particular.

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