Amazon has cut a deal with Discovery to stream its programming, and the announcement has spawned a serious question about the future of TV in general, and of TV Everywhere in particular. Like just about everything else in video, this is complicated.
Let’s start off with some data. The largest segment of viewing that flees standard TV (including standard, integrated, VoD) is the segment who’s disgusted with what’s on and jumps onto the Internet in quiet (well, sometimes not so quiet) desperation. This group is, in terms of population, half again as large as the youth segment. It streams more than three times the material as youth. Its material is almost totally monetizable (you can sell it or sell commercials into it) where the youth segment consumes a lot of YouTube clips of basketball tricks. In terms of market segment, this one is also the fastest growing.
The big question is where the stuff will come from, which is where the Amazon deal fits in. Adults in the 30-45 year age range said that they liked eleven TV series that had run more than ten years ago better than anything (other than news or sports) currently broadcast. TV series are the most popular fodder for those disgusted with “what’s on”, in part because people tend to have “slots” an hour in length filled with unsatisfactory material but bounded by stuff they’d still like (or be willing) to watch. Thus, movies are less valuable, and thus Amazon’s deal with Discovery could be significant.
The other dimension of this is production, of course. TV Everywhere isn’t a viewing strategy, it’s a paying strategy. The problem with online TV is that the total value of commercials in the material is about 3 to 5% the value of what could be sold into standard channelized programming delivery. That’s not enough to fund the production of the show, so the immediate problem with a pure streaming strategy is that even the die-hard Lucy fans will eventually get tired of watching her eat chocolate. TV Everywhere says, in effect, that you have to pay for the shows in channelized form to get them in streaming form.
Ah, and here’s then the real reason why the Amazon/Discovery thing is important. It’s not that getting TV Everywhere knocked off means that somehow the Internet is going to replace all of TV; if it does there won’t be anything to watch. The thing that could be not only important but critical is that the networks that produce the content are the ones that we need to keep in the game. If they can go directly to the consumer or to a portal/distributor player like Amazon and cut a better deal than they can get by working with cable companies, the total amount of content in the mill might actually INCREASE. So the thing to watch now is whether the networks, starting of course with the cable networks, start to work “deeper” content distribution deals. Sure, Amazon is a step, but the real news would be that Discovery decided to stream its own stuff for pay. If that happens, the whole industry changes.
