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Cord-cutting, Time Warner analytics, and why the WWE model makes the most sense

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Check out the chart above. It’s from Time Warner; during the last quarter reported, they lost 217K video customers (while gaining about 39K broadband customers). You’d have to head back to 2009 to find the last time the company added more video customers than it lost. That’s a big deal, because Time Warner has a quasi-monopoly in some of the nation’s biggest areas, like NYC. I used to live there, and while I didn’t officially cut the cord until I headed to the Midwest, I was disgruntled as hell about Time Warner billing forever and a day (I probably didn’t cut the cord out of laziness, in some respects/hindsight).

This is a small sample size, yes — and Comcast recently added TV subscribers for the first time in six years — but cord-cutting is a concern of bigwigs in the entertainment industry too.

When I cut the cord finally, I had a Netflix subscription (streaming only), a Hulu Plus subscription, an Amazon Prime account (that I got at a student rate), and then I jacked HBOGo and WatchESPN from people I know (hey, HBO is fine with it). Between all that, I was fine and I was paying about 1/7th of what I’d pay in bad months before. Cable — full-package style — is essentially a scam. The only thing I’ve really missed, besides live sports on non-ESPN platforms (which I could see at a bar if need be), is CBS stuff, because their current programming really isn’t on any of the platforms I listed.

There’s been a lot of discussion about the future of TV over the past few years. Clearly, it’s going to change. In the mid-1990s, we used the Internet in a wholly different way than we do now. (Hell, in 2006, we used the Internet in a wholly different way than we do now.) Times change, and quickly, with technology. (Captain Obvious alert.) I feel like there’s a natural inclination towards the idea of social TV — big events like the Oscars or the Super Bowl basically own your Twitter timeline as is, so why not be able to tweet straight from your television (some do this already, I believe) — but there are tons of different ideas out there about where TV might go and how we might consume it, etc. I’m not that smart and broadly I have no idea. I do think the way cable is handled is a bit of a rip-off, so I’d like to see a new model emerge within 5-10 years.

What WWE — yes, pro wrestling — is doing might be the answer:

To try to get across just how big—and how good—a deal the WWE Network is, here’s a brief description of it denuded of the word “wrestling.” In its place, swap in anything you love; sports, genres, individual channels, animals that think they’re people. Your niche.

Here’s a streaming network that offers a 30 year back catalog of [THING YOU LOVE]. Add in free access to live [THING YOU LOVE] events that normally cost in the neighborhood of $45 a pop and happen roughly once a month. On top of that, toss in some goofy original content about [THING YOU LOVE], every reality show format you can think of, reframed to specifically target [THING YOU LOVE] in a way that feels like a fever dream of access and delight. You can access this network on nearly any device that you own, perpetually just a few clicks away from [THING YOU LOVE] streaming in 720p.

And it costs ten bucks a month.

For the right person—the person the WWE network is targeting—that’s insane. For the rest of us, it’s a clear-eyed look at what an a la carte television utopia could be.

This could broadly work. If cord-cutting is real and it is ramping up — and the Comcast numbers say maybe it’s not — then why would something like AMC want to attach itself to big cable, when it could produce quality content, make an app/digital space of its own, and charge people 10 bucks a pop to get in on that, including never-before-seen stuff, archives of shows you forgot, etc? All for 120 a year, which is less than one of your cable bills? If you’re die-hard about AMC’s content, this could work for you, no?

Now, there are problems, to be sure. Cable companies are deeply entrenched:

It’s tempting to think that we’re inching closer to a TV revolution; if recent reports of Intel’s internet-TV set-top box are any indication, the technology is certainly in place. But, tellingly, the WSJ reports that Intel’s ambitions have been stymied by the same thing that’s kept Apple on the sidelines: the inability to cut a deal with the networks.

This is the part where we grumble and stomp our feet about the incalculable greed of Big Cable. If Apple could cut a deal with record labels, the logic goes, why not TV?. But the truth is, there’s more than just obstinance at work here. The music industry was dying a slow death when Apple offered a life vest; Time Warner’s Networks division alone, meanwhile, posted a $1.2 billion profit just last quarter. Cable companies and content owners aren’t damsels in distress; they’re dragons stockpiling gold.

And DirecTV may be getting out of the game with WWE over the new network, although admittedly that probably hurts DirecTV more than WWE.

This a-la-carte approach, though, is a good business model and fixes other problems for a given network: piracy, for one. You’re increasing the social cache of friends watching your programming together, too!

And if you want to understand what the WWE gets out of it fiscally, well… 

The launch of the network represents a key element of the Company’s 2013-2015 business plan, which was designed to achieve significant earnings growth. Management maintains its expectation that the planned network will contribute to potentially doubling or tripling the company’s 2012 OIBDA results of $63 million by 2015.

Yep.

Hopefully this is the future of TV, honestly. I’d love to pick and pop on “Oh, I like this — get the digital access” and “Ooooh, ABC Family — gimme that.” That’s basically what I’m doing with Hulu, Netflix, and Amazon with periodic trips to bars / down a moral rabbit hole with HBO. It will take a while for this a-la-carte idea to be the broader norm, but it should be. That, and the ability to tweet straight from the right side of your screen. Let’s get it going.

Ted Bauer

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