Coming Unbundled: Media Companies Continue to Adopt Direct-to-Consumer Subscription Models
The truly surprising news was that, one day after the HBO announcement, CBS announced it too would soon be launching standalone subscription services sold directly to customers. CBS's move underscores the fact that we will continue to experience fundamental changes in content delivery business models.
This disintermediation is made possible by consumers' internet services, which usually have bandwidth sufficient to stream or download video programming.
A dedicated effort on the part of HBO and CBS will be required to support these new models, and it will not come without pain. (In October HBO announced a 7% layoff of its workforce.) However, the strategic and financial benefits are significant. It will enable:
- Sales and delivery of content to customers for whom cable content bundles are too expensive, increasing market reach.
- Control over pricing.
- Direct marketing relationship with the customer.
- More detailed usage data, providing clarity on consumer demand.
The benefits of disintermediation also apply to book publishing. Control over pricing and a direct marketing relationship with customers are critical tools for supporting sustainable revenue streams. Book publishers must assess their opportunities to deliver their goods direct-to-customer and to pursue such opportunities with verve.
A common refrain from book publishers is that in order to sell content, they must depend upon channel partners, such as Amazon, Apple, Safari, and Oyster, to improve product discovery. That may be the case for many, but some organizations will have the option to offer direct services.
The ability to go direct hinges on the brand value of the publisher. HBO was able to move toward a "stand-alone" model because its brand had sufficient equity to create a direct relationship with customers. In the past, book-publishing companies generally have not put a priority on developing their brands, and the result is a reduction in the number of viable distribution options. However, those organizations that have invested in creating brand value, such as Scholastic or Harlequin, are in a position to offer services directly to their customers and they have done so with admirable result.
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