While speculation continues on the future of the video marketplace, there is a general consensus on Time Warner’s decision to make HBO available on its own terms without MVPD intervention.
Today’s upward-pointed thumb belongs to Fitch Ratings.
As a general thing, Fitch noted that the TW move, along with the similar initiative just launched by CBS, are a clear indication that changing viewership patterns are skewing content distribution to online platforms.
Regarding the HBO move specifically, Fitch said, “TWX’s new OTT service is in line with its overriding strategy to leverage content creation and production capabilities and to align monetization opportunities with evolving media consumption trends.”
Noting that it has no influence on the company’s credit rating, Fitch said it could very well be an overall positive. “HBO intends to initially target the OTT service at an estimated 10 million broadband-only domestic households that do not have access to HBO service and views the OTT service and incremental to its multi-prong strategy to expand its domestic subscriber base and grow revenues.”
RBR-TVBR observation: We think that right now the puzzle is missing a few pieces. The services that manage to attract significant action from cord-cutters may prosper for a time while MVPDs suffer, but we firmly believe that consumers are going to tire very quickly of shelling out significant cash to a multitude of programmers, eventually paying more than they do not for less than they get now though standard MVPD bundling.
And if there is indeed a migration away from traditional MVPDs, broadcasters, networks and cable channels that rely on retransmission fees are also going to suffer.
The path we see is the entry into the market of a new form of bundler, which could of course evolve out of the current cast of MVPD players.
Bottom line is that there has not been nearly enough change to significantly alter current video marketplace balances, and there are far more questions than answers as to where this is all headed.
These conditions make it imperative for stakeholders to stay on top of the news, experiment with new platforms and above all, stay alert and flexible.
