Media Giants Face Difficult Programming, Financial Decisions as Streaming Takes Off
As viewing numbers increase, media giants are increasingly left with the difficult decision of determining what content goes on linear television and what gets added to streaming services, along with balancing the costs involved.
In most cases, the streaming content differs dramatically from the linear content. The industry giants like Disney, NBCUniversal, and WarnerMedia know they want to invest in the streaming future, yet they also know they must continue to maintain their cable TV infrastructure — and customer base — as long as they possibly can.
“The challenge all of these companies are battling — the central question — is what content goes where, who decides, and why?” said Rich Greenfield, a media analyst at LightShed Partners in a new analysis of the streaming landscape posted on CNBC.
A Nielsen report from June shows that broadcast numbers are slowly declining as streaming continues to grow. While broadcast TV appears to be on its way out, streaming hasn’t completely taken over yet. This means that media companies must continue offering unique content to both streaming and broadcast customers.
“It’s the innovator’s dilemma in action,” said one veteran broadcast television executive. “You know the linear TV world is collapsing, but you’re trying to stay on the Titanic for as long as possible. At the same time, you’re setting up the lifeboats, which are digital and streaming.”
As many consumers are deciding to cut the cord, companies have chosen to keep primetime news and sports programming on cable TV. This may help retain customers who would otherwise cancel their cable TV subscriptions.
Disney has an opportunity to take a different approach and draw in a larger streaming audience. While they have long held the broadcast rights to the NFL’s Monday Night Football package, they have now gained the additional rights to stream MNF on ESPN+ beginning in 2023, though the giant has yet to indicate whether that will happen.
A recent survey shows that 79 percent of global sports fans would prefer to stream sports content rather than watch on more traditional linear TV. If consumers switch from cable to Disney’s streaming services, the company will end up losing money. To compensate for this, a price hike may become inevitable.
ESPN+
ESPN+ is a live TV streaming service that gives access to thousands of live sporting events, original shows like Peyton’s Place, the entire library of 30 for 30, E:60, The Last Dance, as well exclusive written analysis from top ESPN insiders. Sports available on ESPN+ include NFL, MLB, NHL, UFC, College Football, F1, Bundesliga, PGA Tour, La Liga, and more.
The arithmetic becomes difficult when calculating all of the variables involved. Disney will increase the price it charges customers for ESPN+ to $6.99 per month in mid-August. However, they make more than $9 per cable subscriber for ESPN in pay-TV distribution fees, according to the CNBC article.
Once coupled with other ESPN networks, plus ABC and Disney Channel, Disney clears more than $16 per month from each customer on traditional cable. Or more plainly, for every customer that pulls the plug, Disney loses more than $16 per month.
“Nobody is ready to unplug the linear ecosystem, because it brings in so much cash,” Greenfield said. “So they’re all balancing how to manage legacy assets with future investments that are free cash flow negative to show Wall Street that they’re trying. They’re all walking the tight rope.”