Pay TV Packages, Re-Imagined -- “The Great Unbundling” of Fall 2014

2014 is a transformative year for the media and entertainment business.  We will look back several years from now and fully realize this.

And, it’s not just about MCNs and the continuing litany of massive M&A and strategic investment.  Its about fundamental changes in the underlying forces (including the ascension of millennial mobile video consumption and engagement) that drive consumer behavior. 

Case in point Pay TV bundles.  These remarkable past 6-8 weeks mark THE moment in time at which previously sacred traditional cable/satellite pay TV programming bundles -- and the decades old business models behind them -- came under serious fire by concrete strategic actions by central players amidst this accelerating mobile and OTT video reality (and the consumers -- especially millennials -- behind it).  Yes, there has long been talk of such moves.  But, now major players in the overall ecosystem are taking real transformative action.  (For a great discussion about potential “winners” and “losers” in this great unbundling of pay TV packages, read Todd Spangler’s piece in Variety linked here.)

In October, HBOand CBSeach announced in rapid succession that they would offer their own stand-alone over-the-top (OTT) services.  No cable or satellite subscription required.  Competing Starz network later confirmed its own major international-focused strategic initiative to that same end.  And, AT&T – which just recently was integral in the acquisition of leading MCN Fullscreen via its $500 million Otter Media joint venture with The Chernin Group – also just recently entered the unbundling fray.  A few weeks back, AT&T announced a new $39/month U-Verse programming bundle that includes HBO and Amazon Prime video, together with basic cable programming PLUS broadband.  Via this new stripped down efficient package, AT&T smartly targets cord cutters -- and, importantly, the increasing number of “cord nevers” (those, especially young adults, who never subscribed to programming packages in the first place). 

Other cases in point.  Viacom recently 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.  Verizon joined these others and 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 expressly pronounced what was almost unthinkable not long ago – i.e., 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.”

Welcome to “The Great Unbundling” of 2014. Transformative times in the media and entertainment business – particularly in the past few weeks.  

Bundle together these disruptive deals of just the past month or so and you have yourselves a digital media revolution ....