Virtually nobody in business ever wants to say that an industry or firm transition from an older business model to a newer model is doomed to failure. Instead, we’ll hear all sorts of recommendations for what to do and how to do it. "Hybrid" models will be talked about, but also some calls to "stop it," as though that ever works.
So we hear "creatives" who develop content for a living decrying the impact of artificial intelligence on their business models. But like it or not, disruption is coming. An earlier generation of creatives had to deal with the impact of the internet, and AI will be at least as profound.
Major technology transitions often lead to disruption on a massive scale. Eastman Kodak did not survive the shift to digital photography. Tower Records and Virgin Megastores did not survive the shift from physical media distribution of music to streaming.
Blockbuster Video did not survive the shift from physical media for video to video streaming. AOL survived, but never regained its stature once the internet experience changed from a walled garden to open internet format.
Most non-facilities-based internet service providers in the dial-up era did not survive the transition to broadband service.
One does not hear industry executives or analysts claiming that today’s video distributors and content creators will not survive the shift from linear to streaming. But that cannot be categorically ruled out, either.
As the video content industry struggles to build profitable business models for streaming services while slowing the decay of linear television, Some common answers tend to be given for how linear and broadcast content can complement streaming, as the linear business declines.
One might argue there is almost no problem the video streaming business model has that could not be fixed if advertising revenues are boosted or somehow replaced by other new sources.
Most of the other revenue and cost elements for linear and streaming models are comparable. Streaming does impose new costs in the areas of on-demand support, but has the same marketing and technology costs as does linear delivery.
And though original content production is generally deemed to be more important for streaming, and often means higher costs, overall content licensing content costs can be lower, in many cases.
Some television industry executives see broadcast evolving alongside streaming by focusing on live content and events; perhaps focusing on local content; sharing content libraries and using linear broadcast TV to build interest in streaming exposition.
So live sports, awards shows, news, and reality TV with audience participation are difficult to replicate on streaming platforms where content is pre-recorded, leading some to speculate the future of broadcast TV is reality TV.
Some argue that local news and weather are another area of strength for linear services. Local news is among the best revenue and profit generators for local broadcasters, along with local sports. Syndicated programming (talk shows, sitcoms, game shows)) are generally less profitable. Childrens’ programming tends to be the least profitable content type.
But a growing number of observers believe linear broadcasts can be a means of building interest in TV series that are offered on a multi-season basis on streaming platforms.
Some note that big events and specials, including highly-watched sports events such as the Super Bowl, gig-budget miniseries, documentaries, and specials can offer a unique linear experience that can't be replicated as well by on-demand streaming platforms.
Cable TV industry executives continue to explore ways to make streaming services complementary to linear subscription TV, perhaps initially by bundling linear with streaming.
As reasonable as those approaches might be, it appears that live programming and content is becoming a feature of both linear and streaming services.
The video streamer's focus on original and new content is driven by the need to keep customers engaged over time.
And that is why sports programming--though expensive--is favored by many streaming providers: it supplies an endless stream of original and new content. To be sure, unscripted content tends to be less expensive to produce than scripted series, but sports programming is expensive, if unscripted.
To a lesser extent, news programming offers similar advantages. It is unscripted and changes every day. Though the “news” focused consumer is a relatively small segment of the viewing and subscribing public, its “new and original” value remains high, for those who favor it.
Other tactics, such as bundling multiple subscriptions together is another tactic aiming to increase the amount of new content available on a recurring basis, and therefore a way of boosting the value and stickiness of a subscription.
Content library depth might seem appealing, but new and original content seems to outweigh library extensiveness.
The objectives of all that effort will be to create new revenue from streaming that at least matches the lost linear service revenues.
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