Coming Unbundled: Media Companies Continue to Adopt Direct-to-Consumer Subscription Models
When I began writing this column six-and-a-half years ago, the industry was embarking upon a period of transformation. It was clear that content delivery revenue models would be undergoing unprecedented change. What was not clear was exactly what these models would turn out to be. Some recent events have shed light on the nature of the sustainable revenue models for the future of media delivery.
Publishing news in the first half of 2014 was dominated by one word: subscription. Subscription-based digital trade book delivery models were announced with much fanfare from Oyster, Entitle, and many others. Such services put book publishing squarely in the digital "subscription economy" along with Netflix, Pandora, and Hulu. In point of fact, book publishers have participated in the institutional subscription market for some time through aggregators that provided a channel into the library market. Nevertheless, 2014 will be remembered in the annals of publishing history as the year in which book publishers acknowledged the fact that many of their customers wish to receive book content via subscription services.
More recent news, which was somewhat unanticipated (by me at least), reveals further characteristics of emerging media models. This news did not come from book publishing directly, yet I feel it has relevance to the business of books. Long considered the jewel in the cable industry's crown, HBO announced that beginning in the first half of 2015 customers will be able to buy standalone streaming service directly from HBO. Consumers will no longer be forced to subscribe to a whole bundle of channels they do not want (and might not be able to afford) in order to see The Leftovers.
For some time, consumers had access to HBO content on mobile devices via the HBO-only HBO GO app. However, the news was somewhat surprising given the conflict this will create with HBO's primary distribution channel, the cable providers. HBO's move was a direct response to services such as Hulu and Netflix, which gave HBO more than a little pause with breakaway hits like House of Cards, Orange Is the New Black, and Transparent. As consumers increasingly sever ties with cable providers, HBO moved to sell directly to these "tether-less" customers.