The pay TV bundle as we’ve known continues to get broken up—not just in terms of content, but in time.
Former Sling TV group president Warren Schlichting opened Fierce Video’s OTT Blitz Week by pitching an easy-come-easy-go acceptance of churn as part of a subscription’s life cycle.
“Sling kind of broke the mold when we offered our skinny bundle,” Schlichting said to Dade Hayes, New York business editor for Deadline Hollywood. But the difference wasn’t just fewer channels but no contracts: “If you’ve got people going in and out, then you’ve got to market to people to get them to come back.”
Schlichting, who left Sling in June after two quarters of declining subscriptions, advised video services to think about the lifetime value of a customer who may drop, resume, trim and expand service multiple times.
Saying “Is churn really an applicable term?”, he noted the lower cost to win back these viewers: “You spend a tiny amount of money to get them a second, third or fourth time.”
His views found some support among executives who participated in the hour-long panel following Schlichting’s 20-minute chat.
“I think the important piece is flexibility to the consumer,” Stefanie Meyers, senior vice president for distribution at Starz, told moderator Jon Watts, senior editorial advisor at Beet.TV. “If they want it a la carte standalone this month and they want it bundled next month, we should meet them were they are.”
Randy Ahn, director for premium subscriptions at Roku’s Roku Channel, concurred.
“One of the trends we’re seeing today is subscription cycling,” he said. “How do we make that easier for the consumer?”
Schlichting, however, warned that entertainment companies now jumping to launch standalone streaming services would struggle to connect with these newly empowered customers.
“They’ve always been in the wholesale business, and customers have arrived through the efforts of distributors,” he said. “To actually go out and get these customers is tough, tough, tough.”
Roku’s Ahn said customers exiting cable and satellite would find cheaper streaming bundles an easier sell than standalone products: “Bundles are a great sort of gateway into OTT.”
Schlichting admitted his surprise that those legacy providers hadn’t taken advantage of one possible glide path away from the dwindling margins of video: outsourcing that work to streaming services like Sling.
“Sling was just such an obvious solution for the smaller broadband providers who were losing money in video,” he said. “Well, that’s logical. But the emotional side of it is, ‘we built our business on video.’”
The few legacy pay-TV providers to have signed off of video have also found they’ve had to engage in hand-holding exercises for their remaining TV subscribers.
Neither Schlichting nor the subsequent panelists had great answers for the issue of programming cost inflation. He called sports “completely broken” but predicted that category, with news, will hold its own in this universe of loosening bundles.
That leaves entertainment firms competing for consumer budgets that won’t expand and already have some vendors looking like long-term occupants. As he put it: “We’re being trained by Netflix and Prime and Hulu that you can get a lot of entertainment without ads for a few bucks a month.”