SpectatorBytes

Last week, Paramount announced that they are forming a new venture with MGM and Lionsgate to launch a new pay for TV and VOD network (see here). This meant that Paramount opted for not renewing its distribution deal with Showtime Networks.
While most of the discussion on this event has been focused on alleged animosity between CBS and Viacom, the current analysis seem to have ignored what the potential success of this enterprise may mean for cable networks and content producers.
If this venture is successful, cable networks that lack original programming could quickly be des-intermediated by content producers.

As consumers preferences shift away from appointment television and channel affiliation to on-demand programming, content producers as well as MSOs have an ability to change the current economic model of cable television. This is something MSOs would love to do.

In this context, original and “hit” programming become a key element for long-term survival. Channels without these elements would seem to face the most exposure – even a powerhouse channel like HBO could be threatened by this potential trend.

Programming and packaging will remain important in digital environments. Consumers will rely on certain branded channels to enable them to discover new content. However, consumers would expect these channels to be highly specialized and knowledgeable about their audiences/communities. Most generic channels that rely on only one or two signature shows to anchor their entire offering may find challenging to survive long-term.
Content producers should rejoice given the growing power of hit content. Content Packagers (e.g., cable networks) focus…focus…focus on developing a highly targeted offering.

Please keep in mind these changes take 5-10 years to take hold…but preparing for that change may take players just as long.