AT&T-Time Warner Green Light Means More Big Cable Bundles - http://earlyretireonline.com | how to earn money fastJune 13, 2018 1:37 pm
Categorised in: Breaking Financial News
In the future, you will pay lots of money for lots of entertainment options.
Sound like what you’ve already got—a bundle of cable channels, voice service and internet access? The merger of AT&T and Time Warner, approved Tuesday by a judge after a long delay, is more proof that this reality will endure.
Tech companies, meanwhile, have done a fair job of destabilizing the existing players. Netflix , Amazon and Google’s YouTube have redefined the TV show, while the smartphones and set-top boxes powered by Apple and its competitors have changed our viewing habits. Everything is on demand, everywhere.
But the entertainment companies, which still control the most popular brands and content, saw what happened when Apple took over the music business. So they sought refuge with big media conglomerates. This battle with tech companies was Time Warner ’s TWX 2.90% primary argument in favor of its acquisition by AT&T. As a result, Steve Jobs’s famous deathbed promise to reinvent broadcast TV hasn’t happened. For now, at least, the internet will not be disrupting the bundle.
The Justice Department’s chief antitrust lawyer argued that this merger would “greatly harm” consumers with “higher bills and fewer of the new, emerging innovative options.” It’s not clear that it will, as U.S. District Judge Richard Leon ruled. But the deal also will mean more of the same: bigger—not cheaper—packages of entertainment rather than the a la carte, pay-as-you-go custom content that many customers have long desired.
Then Like Now
The classic triple play—call it the boomer bundle—included many TV channels, broadband internet and a landline.
With the rise of streaming, bundles were thought to be on the way out, making way for extremely personalized offerings: You pick your internet provider, your phone carrier and the assorted video sources you like, be they channel apps like HBO Go, low-cost libraries of content like Hulu or Netflix, or full lineups from Comcast’s Xfinity or AT&T’s DirecTV.
Now the big bundle looks set for a comeback. Not only is AT&T about to get Time Warner, which includes HBO, CNN, the rest of the Turner channels and the Warner Bros. movie studio, but Comcast, already owner of NBCUniversal, is likely to pursue 21st Century Fox , sucking up yet more content. (21st Century Fox and Wall Street Journal-parent News Corp share common ownership.)
Internet service providers will have the opportunity to offer content produced by their entertainment divisions free to customers, or as part of competitively priced packages. (When streaming content is offered free, it is known as “zero rating.”) With the end of net neutrality—which would have kept the internet’s gatekeepers from abusing their power to charge other companies for carrying their data—telecom giants are more likely to aggressively pair their offerings with free content. And as usual, they’ll license content to one another.
The biggest difference between the aforementioned boomer bundle and this new millennial one is that you can access content through more devices, in more ways.
Wireless is already becoming a much bigger part of entertainment delivery, and wireless providers will include more content as part of their unlimited service plans. Meanwhile, as next-generation 5G networks become a thing, companies such as Comcast will offer wireless service.
Competition among wireless carriers—especially pressure from T-Mobile—has helped to drive down the cost of wireless plans. Content deals will probably mean internet service providers will encourage people to opt for the premium end of their menus. (Verizon may need a studio of its own; content from AOL and Yahoo can’t compete with the output of HBO and Fox.)
Standing apart from these vertically integrated entertainment/internet megacorps, Netflix is, ironically, the new HBO: the one service everyone has to offer, or at least not throttle, even if they legally can.
Netflix’s strength is its original programming, the same differentiator that’s helped HBO weather the changing cable landscape. Sure enough, in April, Comcast announced it would start including Netflix in some cable bundles.
Like Comcast, Disney has its eye on Fox: Whichever company gets Fox ends up with a majority ownership of Hulu, a popular digital property in its own right. In other ways, Disney finds itself in a similar position to Netflix. Disney intends to launch a family-friendly streaming service, and it already has the stand-alone ESPN+ internet offering.
Tech to the Rescue?
If you thought a tech columnist was going to say that, eventually, a full range of name-brand choices—from sports to late night to sitcoms to drama—will come from Apple, Google, Amazon and/or Facebook , you thought wrong. It’s not going to happen.
These megamergers will probably further stymie the efforts of Apple and Google to disrupt the video market with set-top boxes and content deals. Both companies have deep pockets, but it’s hard to have leverage over competitors and consumers when your set-top boxes are nearly interchangeable and you don’t own an HBO or an ESPN. YouTube, Apple, and now even Facebook are fighting back with original and exclusive content, but in a world where there are nearly 500 scripted shows already, these nascent efforts have difficulty gaining traction.
The tech giant least likely to break stride is, as ever, Amazon. The company seems to view its video offerings primarily as a way to keep customers coming back to that other bundle so many of us have succumbed to: Prime.
In the old days, we paid for hundreds of channels and watched only a few. In the future, we’ll pay for thousands, from a similar handful of providers. We’ll just cherry-pick our entertainment using more sophisticated tools, and enjoy it anywhere, not just on the couch. Here’s to…progress?
Write to Christopher Mims at firstname.lastname@example.org