Nothing demonstrated the confusion over where the future of media is headed than the “over-the-top” panel I moderated at our NeuLion Sports Media & Technology conference in New York last month.
The panel highlighted four media companies, all of whom are using different business models to bring in revenue from their OTT services.
WWE is chasing a pay-model subscription service for $9.99 per month, and HBO decided to mimic its standalone subscription service from linear TV to OTT for $15 per month. The offering from the World Surf League is free to the consumer, and the PGA Tour’s pay service is set up to complement its TV telecasts for $5 per month.
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Laura Martin of Needham & Co. (right) and Shelley Brindle of HBO were part of the panel on over-the-top services.
Photos by: MARC BRYAN-BROWN |
“We’re redefining the nature of choice,” said
Laura Martin, an entertainment and internet analyst for
Needham & Co. “The consumer wants more choice. And the problem is where that takes you. … You have a thousand channels of choice, they each cost $15, $10. The consumer in the end pays for everything.
“There’s a lot of innovation being done, but to create value the fastest, you want to add revenue, not destroy it,” Martin continued. “The legacy of digital is chaos. As we unbundle the TV ecosystem, we’re moving into chaos, which is a synonym for innovation, but it’s going to create havoc with the consumer, too.”
WWE Chief Marketing Officer Michelle Wilson countered that it’s a riskier strategy to not pursue a direct-to-the-consumer business.
“What if you don’t do it?” she asked. “Our digital service has actually improved our fan engagement, so our premium content, which was our pay-per-views, are now seen by four times as many people as they used to be. Ultimately, we think that’s going to drive the other revenue streams.”
Shelley Brindle, HBO executive vice president of domestic network distribution, agreed, saying that the direct-to-consumer offering makes HBO more attractive.
“One of our challenges was that HBO in the minds of the consumers was not a $15 product; it was a $150 product, because the way we were packaged and sold on top of bundles,” she said. “[Skinny bundles] have been fantastic for us. It kind of gets us to a price point that makes it more reachable for many consumers.”
But Martin countered that all the direct-to-consumer offerings would wind up costing consumers more than the traditional pay-TV bundle. Considering the pricing for the WWE, HBO and PGA Tour offerings, that cost would be around $30. “But you have 500 channels for $70 per month if you’re in the big bundle,” she said.
John Ourand can be reached at jourand@sportsbusinessjournal.com. Follow him on Twitter @Ourand_SBJ.
