Is Big Bird the Modern Canary in the Mine?

Those who have been reading my musings over the years know that I have often opined on the changing electronic media landscape.  The announcement last week that Sesame Street would be moving to HBO may well be the tipping point that will accelerate sweeping changes in what we watch and how and where we watch it.  

If you missed the announcement, it related that new episodes of the iconic children’s TV program would first be released on pay TV, i.e. HBO, and after a period of time be released to PBS for free broadcast.  As one would imagine, many media pundits have been lamenting this development as taking away the birthright of millions of American kids unable to access HBO.  While this observation may be valid, the switch by the producers of Sesame Street is also about a shift in how most of us will consume our daily fix of TV.

A closer look at the TV industry, especially the broadcast TV segment, shows that over the air and cable, once the mainstays of the business, are flagging.  Some of the most watched and critically acclaimed programs never get broadcast.  Rather, they are streamed on Netflix, Hulu or Amazon Plus.  Appointment viewing, i.e. waiting for the time the broadcaster decides to show a certain program, runs contrary to having the “what we want, when we want it” mentality.

In the announcement regarding Sesame Street it was made clear that among the reasons that they were moving to HBO was to take advantage of the streaming capabilities.  Children’s programs like Sesame Street are ideal for online on demand delivery as parents look for suitable fare to offer their young children unwilling to wait for the time slot chosen by the local PBS stations  

We are just beginning to see the ramifications of this sea change.  The economic models for local TV stations (both commercial and public TV) have changed.  Once immensely profitable, running a local TV station in the black is now very difficult.   Stations in Ohio and other swing states have been buoyed by political ad spending, but that is not going to be enough to sustain stations in the long term.

So Big Bird may well be that canary in the mine.

HBO and CBS Expand Online Streaming

Last week HBO announced plans to increase program offerings using internet-based streaming.  While the very popular service has had some presence online, the bread and butter business has been delivering programs in cooperation with traditional cable and satellite services.  In the past in order to view HBO programs on your tablet, computer, smartphone or internet connected TV, you were required to be a cable or satellite service subscriber.  In fact, research indicates that HBO is a significant driver of cable customers to subscribe in the first place.  Simply put, up until now if you wanted to watch Game of Thrones, The Sopranos or Boardwalk Empire, three very popular HBO series, you had to subscribe to HBO via your cable company and pay a hefty monthly bill.

For several years customers of cable and satellite services had complained that they were forced into expensive program packages in order to get one or two of the networks they really wanted to watch.  For example, the average US cable customer pays $5.00 per month for ESPN even if they never watch it.  Recently there has been a slow but steady erosion of cable subscribers who prefer the “pay for what you watch” model promoted by online program providers.  HBO, the 800lb gorilla, has been slow to embrace the online model until now.   Their decision may bring us to a tipping point toward a la carte pay TV on cable.

It is not only the cable networks that are embracing an online pay-as-you-go model.  CBS announced that it will begin offering most of its shows online for a $6 monthly fee.  This will allow popular CBS shows to be viewed on demand bypassing local CBS affiliate (in Cincinnati Channel 12 WKRC).  While the other major broadcast networks have not announced similar services, competition will mostly force their hands.

These developments may offer the viewer more options in convenience and program diversity.  The impact however goes well beyond program choice.  The very basic business model of local TV stations is changed by the CBS plan.  Once a conduit for a national schedule of programs, the local station is no longer required to retransmit programming coming from the networks.  The worrisome outcome may be that the TV stations will follow the lead of radio stations when radio networks disappeared.  AM radio today has become a marginalized service full of shrill talk and a forum for both far left and far right wing zealots.  

The train has indeed left the station and there is no turning back.  Let’s hope that some creative minds can find a sustainable model for local TV stations.  They do provide local services that are invaluable to the communities in which they broadcast.