AMSTERDAM -- While some in Hollywood are heralding a golden age of quality TV, driven by investments in new shows and movies by the likes of Netflix (NASDAQ: NFLX) and Amazon (NASDAQ: AMZN), some content providers here at the IBC show are warning of a slowdown in content innovation. Specifically, some executives here believe the growing interest in a la carte options and skinny bundles could ultimately stifle the development of new and experimental TV programs and content.
"There is inherent and massive benefit in the bundle," said John Honeycutt, Discovery Communications' CTO. "We believe in the bundle. It's about the scale of the bundle that's in debate."
The trend away from the bundle and toward a la carte pricing "is a lot more risky for content creators," said Andrew Ferrone, VP of pay TV for Roku.
Gary Woolf, EVP of business development, digital and insight for All3Media, agreed. All3Media owns 21 content production and distribution companies for TV shows and movies, with operations across the world and thousands of hours of content. Woolf said that bundling different TV channels together gives programmers the financial flexibility to experiment with new types of programs. He pointed to AMC networks as an example: The programmer used to primarily show old movies, but due to the financial wiggle room it obtained as part of a bundle of other TV channels, it was able to experiment with other types of programming -- which eventually led to the channel greenlighting critical and cultural hits like Breaking Bad and Mad Men.
Woolf explained that content owners like All3Media need MVPDs to create an audience to view content -- with the bundle, Woolf explained that content providers can easily and quickly gain scale. On the opposite side, in an a la carte world, a content provider would have to create its own audience, which he said is a much more difficult and expensive proposition. "It's a lot harder to generate publicity and buzz" in an on-demand scenario, he said.
However, Tom Morrod, a senior director at research firm IHS, noted that "people are spending more on content" than they ever have, and that the amount of time users are spending watching video is remaining relatively constant, if not slightly increasing. The difference now, he said, is that consumers are watching less pay TV on their television set and more time watching Internet videos on their phones and tablets. He added that the industry needs to do more work to ensure that it is cashing in on that increasing spending and viewership through advertising and other mechanisms.
"I think there's probably a lot of new revenue to be found," he said.
The comments about bundling here at the IBC show are noteworthy considering recent trends in the online video and pay TV space away from expensive bundles of TV channels. Dish Network's (NASDAQ: DISH) Sling TV, introduced earlier this year, runs entirely on the Internet and offers a small number of inexpensive basic cable channels alongside several $5 add-on packages with channels focused on a specific genre, like sports or kids programming. Similarly, Verizon (NYSE: VZ) recently introduced a slimmed down bundle of channels that the company said has been very popular among its FiOS subscribers. Other cable and pay-TV players, including Cablevision (NYSE: CVC) and Comcast (NASDAQ: CMCSA), are moving in similar directions.
Meantime, SVOD players like Netflix and Amazon are spending billions of dollars producing content that is exclusive to their own respective services, in a bid to encourage more people to subscribe.
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