Gavin Bridge (Vice President, Ipsos) is an English analyst based in the US, and in the following IP&TV News exclusive compares the two markets, and explains why the forecast US OTT a la carte revolution might not prove as rosy a destination as many US consumers expect.
Gavin’s a confirmed speaker at this year’s TV Xperience (October 6th-7th 2015, Hilton Times Square, New York).
IP&TV News: What distinct significance does OTT have to the US market as opposed to the UK one?
Gavin Bridge: The fact you can now get TV without having to have the cable subscription is a big deal in the US. It’s slightly different to the UK. No one in the US has every single channel, many don’t even have a DVR. It’s why people here are so petrified about cord cutting.
I don’t think would be such an issue in the UK: there Sky offers new subscribers a £20 a month bill, and consumers get HBO shows and SHOWTIME shows (which in the US is an extra $15 on top of your cable bill) and a free DVR (which is an extra $10 a month here) and a free TV.
You’d never get a deal like that here. Here the same kind of package would come to about $120.
So the growth of freestanding network OTTs has to be great news for the US consumer?
Well the consumer assumes all these freestanding services will all cost a couple of dollars each. People are paying $100 for 200 channels, they do some simple maths, and assume it’s going to be a very cheap deal. Everyone thinks it’s going to be like a utopia and they’re going to half their cable bills.
The reality is, if they end up paying the market rate that the likes of CBS and HBO are setting for their apps, they’re going to be paying the same for cable just with a lot less choice.
Before HBO NOW came out, a lot of people were expecting it to be about seven or eight dollars a month. But why would HBO devalue their brand? If they’re selling it for $15 via a cable company they’re not going to suddenly go somewhere else and get it for seven, because cable are going to kick them off. It’s like what happened with WWE Network here.
Couldn’t people just limit the number of channels to the ones they really want?
In that instance, I think you’re going to get networks being bundled together. Viacom will say, ‘if you want MTV you’re going to have to get these other three networks in that bundle.’ You kind of see that already with the deals that say Sling has made already, because you don’t just get TNT and TBS, you get all the Turner networks
Right now, the average person envisions it as becoming a totally free open market of free choice, but you’re going to be lumped in with whatever bundling there is.
Same old same old for the consumer then, perhaps. What changes could take place if things do continue to develop in this direction?
The interesting thing with the WWE Network as an example, is if they’re managing to make the same amount of money on $10 a month for their stand-alone service versus $60 a month for PPVs through a provider, it really shows you how much of a margin the cable companies are making.
Let’s say all the networks do go it alone. If they’re getting more money, either shareholders will be getting bigger pay-outs and dividends, or they will be able to invest in more content. We already see networks do it to some degree: Turner laid off one tenth of their staff last year, and their aim is to go Monday to Friday, original content, every night. It just means they’ll be too much TV to watch – there already is.