Studios Wasting Away On a Diet of Skinny Bundles

Another week, another skinny bundle package hits the marketplace. As MVPDs and vMVPDs continue to multiply, program suppliers (generally studios), and program providers (broadcast and cable networks, generally owned by studios) find themselves slicing and dicing their licensing rights, desperate to hit every possible consumer on every possible device and platform. In theory, this sounds like a smart idea, but as any ex-music executive can tell you, fragmentation can be fatal to an industry that relies on the few hits paying for the many misses.

The potential fallout of a world where consumers pick and choose their preferred lineup of channels (or taken a step further, pick and choose each program based on a pure VOD play), is the elimination of niche channels and programs that are subsidized by their more popular brethren. For example, ESPN might be a must have for many, but do we really need ESPNews or ESPNU. I love my Discovery, but have never once turned on Discovery Family or Discovery Life. And forget about fringe channels such as AHC, GAC, Velocity or Reelz.

Aside from the squeeze on fringe channels, program providers will continue to see an erosion in ad dollars as viewing shifts from traditional linear to digital. The world of digital advertising is still the wild, wild, west, and agencies and brands are paying pennies on the dollar for the same eyeballs watching on an over-the-top digital service. As skinny bundles and VOD services continue to proliferate, studios will struggle to operate under the same financial model that has ruled the industry for decades. We know that people are watching more content than ever. Reaching the right audience, and monetizing the viewership will be the great challenge moving forward.

#digital #television