Streaming services disrupted the traditional linear delivery model that the television industry had thrived on since its inception. With flat monthly fees, no advertisements and many content options available, the streaming proposition offered consumers an appealing alternative to ad-supported satellite and cable TV. Accordingly, this has led to a precipitous drop in the total pay TV penetration of US households, which is currently down to a level not seen since the early 1990s.
However, the direct-to-consumer streaming model comes with tradeoffs, and streamers are finding it increasingly difficult to profitably distribute their content, which they have amassed and financed without funding from advertisers. Recognizing their predicament, streamers have begun to roll out ad-supported tiers, bundled channel packages and pricing options reminiscent of the old cable model.
Was there, after all, a practicality in the conventional television business approach? And, if so, what does this tell us about where the medium is headed? To get a clearer understanding, we spoke on a recent episode of Double Take with TV industry veteran Doug Herzog, the former president of Viacom Entertainment Group who oversaw a host of popular channels including Comedy Central and MTV. According to Herzog, the TV industry is thirsting for the orienting principles that the streaming services had usurped.
I look at the streaming world and I see all the big ones, right, and they’re like…big department stores…at least, they initially came in saying, ‘We’ve got everything you want…and everything you need.’ So, I look at them, you know, as like Walmart, Walgreens, Target…you’re going to go there anyway because…you know you can find it all there…And it’s a little annoying because it’s big and impersonal, and it’s not fun. It doesn’t feel cool. And, you know, and when I look back at the cable business I was in…running networks like MTV or Comedy Central or TV Land or Spike TV, whatever it was, I look back on that and I go, ‘you know, we were running boutiques compared to these department stores.’ And I think that’s a little bit of what the consumer and the viewer is looking for right now.
Doug Herzog, former president of Viacom Entertainment Group
Herzog believes that viewers are craving more curated content, perhaps tiring of the constant all-you-can-eat buffet tactic that streamers had used to retain subscribers.
The streamers…they’re trying to be all things to all people. They’re big. They’re trying to reach everybody, which is what opened the door to cable, right, back in the…very early 80s. And so, I feel like that door is open again for somebody smart to come in and figure out how to do a more specific, branded, curated version of what the streamers are doing.
Doug Herzog
In Herzog’s view, the more customized mode of content delivery may be ripe for a comeback.
‘Tell me where to get my comedy. Tell me where to get my science fiction. Tell me where to get my music. Tell me where to get my news, sports, docs, movies, diverse programing, women’s programing, you name it.’ And I feel like that’s ripe for a comeback somehow. I’m not exactly sure how it manifests itself. I don’t think these current cable networks and these legacy media companies are necessarily going to figure it out, although a couple of these brands still have a lot of (brand) equity left in them.
Doug Herzog
According to Herzog, it has become more challenging for the TV industry to discern which shows are hits, owing in part to the dearth of public measurement data on streaming viewership, as the Nielsen ratings have long provided for traditional television media. In the linear world, he said, programmers needed to be more careful about what to green-light, as they were limited by the number of hours available to fill. Herzog also pointed out that streamers erred in making their services too easy to cancel—a problem, he joked, cable companies never had.
In Herzog’s view, the industry in some respects has lost its way while trying to grow and retain subscribers and is just now realizing the limitations of the streaming model.
I remember…back at Viacom, you know, as the streamers were coming along, I was there prior to Paramount Plus, you know, really doing our homework and…understanding how difficult it is, to not only get somebody to sign up, but to keep them. And you know, the first word you learn is churn, and it’s all about churn…it’s miserable, shoveling coal into the fireplace 24/7 to keep subscribers…They (streamers) have not necessarily come up with the formula that the industry loves and finds predictable.
Doug Herzog
Subscribe to “Double Take” on your podcast app of choice or view The Future of Television episode page to listen in your browser.
Authors
Jack Encarnacao
Research analyst, investigative, Specialist Research team
Raphael J. Lewis
Head of specialist research
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