Time to Pull the Plug? 8 Real Threats to Traditional TV. More than a popular AMC program, the real "Walking Dead" may just be the service providers that lock people into bundled services.
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For years, people have been talking about the demise of traditional television, and now, it is finally here. It is getting unbundled and attacked from so many different directions that there is no way that it can be around as is for much longer.
Let's take a look how and why TV is getting unbundled, and what the future looks like.
1. Netflix, Hulu and Amazon
Let's start with the obvious ones -- the asynchronous services that continue to grow. Netflix is the current king, with Hulu and Amazon making waves. Their value propositions are simple: Binge watch at your leisure, for a few bucks a months. People are happy to pay for the content they want and on their time.
Related: Is It Finally Time to Cut Cable?
YouTube has also been at it for a while, and offers a different kind of alternative. It is web-native content, and it is fundamentally different from TV. It is bite size, funny, crazy, authentic, raw and perfect for mobile. It's PewDiePie, Nigahiga and Jenna Marbles. We can argue whether it is silly or not, but the fact is these "shows" have more audience than many shows on TV. They are the future.
Over the past couple years, I've seen many people tweet that the conversation on Twitter about a show is a lot more interesting than the show itself. I don't agree with that actually. But I do agree that Twitter is a lot more interesting than many TV shows. It is different, but it is super interesting. And Twitter keeps getting more and more interesting, stealing more and more attention from TV.
4. Live video
The live video is finally here and it's pretty awesome. We didn't quite get the early attempts at it, but it sure feels like between Meerkat and Periscope we are going to have a winner in this category and it has a shot at going mainstream.
There is no question that it will work. It is already working for YouTube. It's already working to a degree for live news. And people around the world are a lot more interesting than a couple of correspondents with the camera. My bet is it will self-organize and self-select into something really awesome. Sure, there will be a lot of low quality stuff, but much like YouTube has its heroes, so will Meerkat and Periscope.
5. Twitch and esports
The Internet has given rise to multiplayer video games and esports. Instead of watching reality shows on TV, the new generation prefers to watch each other playing games. The leagues are similar to NFL, NBA, MLB and NHL, and are formed where teams of players battle each other.
The possibilities are much broader. Amazon already jumped on the trend when it acquired Twitch. This is really just the beginning.
And then there is just better TV than current TV. Vice came out of nowhere, and is now suddenly a $500 million company. What does it do better than CNN? News. Vice is raw, authentic, smart, irreverent -- just the kind of news we'd want to watch on CNN, except it's not available there. Vice is a precursor to a whole slew of new types of media companies that tap into authenticity and take advantage of a generational shift.
One of them is Spoon University (Techstars '15), which is a food brand for millennials. It's exactly the opposite of the Food Network. It's crowdsourced via 3,000 students contributing content from across 60 colleges, and it has a very different voice when it comes to food.
7. The pipes
Another walking dead are the cable companies. First, the fact that TV and Internet are bundled was a hack, and it is about to be un-hacked. If traditional TV is changing and going away, the only thing that is really valuable for the pipes such as Comcast and TimeWarner Cable is the Internet. But wait, their Internet products aren't great and they won't be able to compete. Quite literally, if the old pipes don't have content to deliver they are out of tricks.
The new pipes are going to be optimized not for TV but for the Internet. Because after all, you can get TV and a lot more over the Internet. An example of the new kind of pipe is Pilot, a new Internet service provider in New York City and another Techstars '15 company. Pilot delivers 1,000 to 10,000 megabits per second, with 100 percent uptime guarantee, awesome customer service and software that optimizes delivery for every customer.
I bet Netflix and YouTube are pretty awesome over this sort of channel. That's not what TimeWarner Cable wants to hear.
Not all TV as we know it will die. First, awesome long-form content will still be around because people love stories with twists and knives in them. HBO is the first to jump into this brave new world with HBONow, and networks such as FX and AMC will likely follow the direct-to-consumer play. As long as the content is amazing, people will pay for it, and it will work.
Live sports are the real last stand of traditional TV. DIRECTV has known about this for a while. The secret to its success is not awesome ads (which are actually really awesome), but killer sports bundles and packages. But even that may not last. Just like HBO, major leagues may go direct to consumer. After all, esports went direct to consumer on day one.
The small matter of $70 billion
There is no question in my mind that the day of reckoning for traditional TV is here. This industry is following the likes of music, movies and newspapers. And this day will be really painful.
The reality is that TV ad spend is $70 billion and chief marketing officers of large brands are used to it. Nielsen is "so great" at tying ratings to in-store buys. It's hard for all these guys to accept that it is all smoke and mirrors. It's a house of cards.
Now the question is, where and how will that $70 billion be spent? If history is any indication, and it typically is, the money will fragment and break. It will be spread in bits an pieces across different verticals from above, from YouTube, games, live video and to esports.
No one is likely to own eyeballs the way TV did, because the eyeballs don't want to be owned anymore.
Disclaimer: Techstars and I are investors in Spoon University and Pilot.
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