“Hybrid models” are common when technology changes. Among the examples are sailing ships that, for a while, were outfitted with steam engines as well. Hybrid automobiles using both electric and gas-powered engines provide a more-recent example. Some might place use of renewable and fossil fuel for electrical generation in the same category.
And the whole hybrid fiber coax network architecture is foundational for cable TV companies.
So, one might argue, the recent deal between Disney and Charter Communications ending a carriage dispute indicates a possible shift to hybrid models for video entertainment that might combine linear and streaming services in a new type of bundle.
As part of the deal, the Disney+ and ESPN+ streaming services will be made available to Spectrum cable customers at no extra cost. Comcast, for its part, had for a time offered its ad-free version of the Peacock streaming service at no extra charge to Comcast linear video customers.
The Charter deal with Disney also ensures that Charter customers will eventually receive the planned direct-to-consumer ESPN streaming service when it is launched.
Disney gets a boost in its carriage fee from Charter, but Charter gains more flexibility in how it offers Disney content in packages.
Among the key provisions:
Disney will continue to provide its linear channels, including ESPN, ABC, and Disney Channel, to Charter customers.
Charter will offer Disney+, Hulu, and ESPN+ to its customers as add-on services.
Charter will market Disney's streaming services to its broadband-only customers.
Charter will agree to lower penetration minimums for Disney's linear channels.
Lower penetration minimums--the minimum number of subscribers that a cable or satellite provider must have in order to carry a particular channel--will give Charter more flexibility in how it packages its programming and will allow it to offer more competitive pricing to its customers.
Charter has agreed to market Disney's streaming services to its broadband-only customers, helping Disney grow its subscriber base.
Given the importance of sports programming in general and access to ESPN in particular, the deal helps both Charter and Disney preserve what remains of the value of linear video subscriptions.
But the deal also provides more marketing push for Disney’s streaming services as well, and gives Charter a way to participate in the streaming revenue stream, as it will act as a sales channel for Disney streaming services.
As so often seen when technology transitions happen, hybrid models are viewed as a prudent and logical bridge to the future.
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