EDITORIAL: Channelpocalypse?

OK, I’ll say it. There are probably too many TV channels. In fact I’m not the only one to say it. Every time someone subscribes to a “skinny” package from DIRECTV NOW or Sling, they’re saying the same thing. There are too many choices and they’re just not all that good.

Making matters worse is the fact that there are a bunch of channels that share content. I’m talking about Discovery channel vs. Science Channel, or Disney Channel East vs. Disney Channel West. These channels each cost money for your pay-TV provider and it’s hard to say they really bring a lot of value.

And then there’s the internet. When you add subscription video on demand services like Netflix, Hulu, and others, there’s even more content. Of course, if you’re just talking about video of any kind you have to count the roughly 37 billion YouTube videos out there (made up number.) It’s a lot of entertainment. Probably too much.

So are we heading toward “channelpocalypse?”

“Channelpocalypse” is my term for a mass extinction of channels that could happen in the next few years. Average pay TV bills have reached an all time high of $107 per month on average, and when the economy tightens up again that’s going to seem like a very high bill. As people ditch higher-cost packages for lower-cost ones, or cut the cord altogether, it’s going to be hard to sustain a lot of these less popular channels.

I could imagine a scenario where your national channel selection shrinks down to just 50 or so top channels, with only one “Discovery,” only one “HBO,” only one “ESPN” instead of half a dozen of each. But how likely is that to happen?

I guess that’s the real question.

Any change like that would take a lot of contract changes.

Remember that retransmission contracts last 3-5 years. So if a company wanted to shrink its channel selection without renegotiating, it would take 5 years before they really could.

Cutting channels doesn’t save money — at first.

Sure, getting the content is expensive. But a lot of the cost involved in providing pay-TV is in the infrastructure. Sure, a satellite doesn’t actually cost anything to operate on a daily basis. The costs of getting it up in the sky and watching it from the ground are high, but the satellite itself doesn’t send a bill down to the ground. But for traditional cable companies, there’s still a lot of hardware to maintain and just turning off a channel doesn’t really save you money. So, if a lot of channels went dark it could end up being costlier for cable companies, who would lose subscribers.

It just doesn’t seem likely

It seems to me that the cost of operating these duplicate channels is probably pretty low and there’s still some small benefit to it. After all, if they were money losers they wouldn’t exist.

Will it all go “a la carte?”

Folks, if you don’t really remember back half a century, you’re not alone. But if you do, you remember that network loyalty was a thing. Each broadcast network had a character and if you fit that character, you were more likely to just turn on the TV and leave it on that channel all night.

Today we don’t think of networks, we think of shows. We ask legitimately, “Will AMC be able to survive after Walking Dead is over?” (It might not.) I for one, haven’t watched a moment of Discovery channel since the end of Mythbusters. We don’t focus on channels because so many of them are these generic “lifestyle” sort of things where all the shows seem the same. So we develop an attachment to one show and when that show is over we move on.

Strangely, one channel that’s managed to keep a lot of loyalty is Hallmark. This one channel has actually managed to build a brand filled with simple, saccharine stories that have common themes. If you turn on Hallmark channel and like what you see, chances are you’ll like the next show, and the next. But this is very rare.

So if we really only care about the one show, maybe it’s going to go to a pure on-demand model where you can pay $10 for a season of a show you like. iTunes tried this some years ago and it didn’t catch on. Still, it could. If it did, the very idea of “channels” would disappear.

You’ve been waiting long enough: my take

I do think we’ll see some sort of massive change to the way video is consumed. I think we’re already seeing it. Millennials and Gen-Z are almost completely on-demand watchers, adding and removing services at will whenever they want to watch something new. In 20 years or so that’s where it’s going.

Still, there are millions upon millions of baby boomers and Gen-Z who are going to keep watching TV the traditional way, probably their whole lives. These are the people who make up the core audiences for traditional pay-TV, and it’s my feeling that pay-TV will keep catering to them as long as possible.

So, I think a channelpocalypse is unlikely in the next decade. Pay TV will keep getting more static in order to appeal to the customers who are likely to keep paying for it. At some point that customer base will start dropping off and then you’ll probably see massive changes in all aspects of pay TV. Just don’t hold your breath, because that’s a long long way off.