Welcome to the great unbundling.2014 is a transformative year for the media business. We will look back several years from now and fully realize this. So, internalize that now.
First, anyone who reads my blog knows that we are in the midst of MCN fever. Not a fad. But a fever. A fever justified by the onset of a new world order -- the rapid ascension of millennial mobile video consumption and engagement which, in turn, accelerates the need for (and fuels the development of) compelling premium short form video optimized for that platform. That means a growing need for media companies successful playing in that world. And that means the growing importance of MCNs, which explains 2014’s accelerating pace of MCN M&A. The latest and greatest example, of course, is this past Monday’s Fullscreen/Otter Media mega-deal (here are my predictions of which MCNs may be next).
But, there’s much much more in 2014, particularly in this remarkable month of September. This month marks THE moment in time at which previously sacred traditional cable/satellite programming bundles -- and the decades old business models behind them -- came under serious fire by concrete actions (rather than talk) amidst this accelerating mobile and OTT video reality (and the consumers -- especially millennials -- behind it). Yes, there has long been such talk. But, this month there has been real disruptive action.
AT&T -- no longer your father’s AT&T with all of its remarkable digital moves in 2014 (including its acquisition of MCN Fullscreen noted above via its $500 million Otter Media joint venture with The Chernin Group) -- is leading the charge. Yes, THAT AT&T. Earlier this week, AT&T announced its new $39/month U-Verse programming bundle that includes HBO and Amazon Prime video, together with basic cable programming PLUS broadband. That’s right. HBO! Via this new stripped down efficient package, AT&T smartly targets cord cutters (“come on back”) -- and, importantly, the increasing number of “cord nevers” (those, especially young adults, who never entered the fold in the first place due to traditional bundle pricing). Sure this news got some real press. But, am not sure it is fully appreciated. This new bundle is a very big deal. And, make no mistake, others will rapidly follow suit.
Other cases in point. Earlier this month, Viacom licensed 22 of its live and VOD premium networks to Sony for its new OTT service for PlayStation, Sony TVs and other Sony connected devices. And, in rapid succession, Verizon announced an early 2015 launch for its long-anticipated “virtual” MSO that is so virtual, it is wireless -- specifically designed for mobile. And, critically, core to its new service, Verizon announced a down-sized “bite-sized” cable-lite programming package that features mobile-friendly MCN AwesomenessTV short form video, in addition to big 4 broadcaster content and NFL games (via its existing exclusive smartphone deal).
When announcing its new service, Verizon Chairman and CEO Lowell McAdam proudly exclaimed the almost unthinkable -- that “among cable programmers, there’s been an attitude shift among cable programmers toward accepting a new over-the-top model for delivering pay TV.” And, Verizon’s McAdam was not alone. CEO Jeff Bewkes of Time Warner emphasized the company’s growing interest in offering HBO Go as a stand-alone OTT service -- absolute heresy ... until now (as I indicated previously).
2014. Transformative times in the annals of the media business. A time of massive new opportunities for those brave enough to pursue them (and strong enough to withstand the pain of the current disruption).
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