‘Burn the boats’: TV networks playing with fire in streaming pivots

Ask an entrepreneurial type about the innovator’s dilemma, and they’re likely to advise burning boats.

It’s a reference to the legend of controversial Spanish conquistador Hernán Cortés ordering his ships be torched to eliminate the possibility of retreat when attempting to conquer the Aztec empire. A media executive offered up the strategy as a solution to the plight that TV networks find themselves in: The foundation of their industry is no longer shifting to streaming but has, in fact, shifted.

TV networks had initially anchored their fledgling streaming operations to their lucrative linear TV businesses. But now, in light of this year’s streaming viewership surge and the pay-TV subscriber base’s continued erosion, these companies need to not only to unmoor their streaming businesses but lash their traditional businesses to them and even be prepared to throw those legacy lines overboard. “Somebody does have to burn the boats,” the media executive said.

Somebodies seem to be doing just that. WarnerMedia CEO Jason Kilar is effectively holding a torch to the AT&T-owned conglomerate’s theatrical film business by announcing it will premiere its entire 2021 film slate on HBO Max on the same day those movies will be released in theaters. Meanwhile, NBCUniversal CEO Jeff Shell is reportedly considering setting alight some of the Comcast-owned conglomerate’s cable TV networks as he reorients the Peacock parent around streaming. Then there are ViacomCBS CEO Bob Bakish and Discovery CEO David Zaslav who each seem to be similarly centering their companies around their forthcoming streaming services, Paramount+ (the renamed, revamped CBS All Access) and Discovery+.

A decade ago, these executives would have been considered out of their minds. But in 2020, they’re considered behind the times. Disney may have only launched Disney+ a little more than a year ago, but even ad buyers — a group that continues to spend the bulk of their budgets on traditional TV — consider these networks a little late to the game, especially the likes of ViacomCBS and Discovery that are not yet considered in the game because their respective streamers do not launch (or relaunch in the former’s case) until next year.

“By the time those guys hit the market, the other guys will have already seen [audiences solidify their streaming viewership habits],” said one agency executive. “I feel like this was the worst time to lose a year.”

However, NBCUniversal and WarnerMedia are showing it’s not too late. And while the latter appears to evince boat-burning at its brightest, the company may actually be the most careful with how it is playing with fire on the linear TV side of its business.

NBCUniversal’s Peacock has had 26 million people sign up for its service, including the addition of 4 million sign-ups since September, NBCUniversal’s Shell said at an investor conference on Dec. 8. To be clear, sign-ups does not equal subscribers or active users. But the figure at least indicates that Peacock continues to pique people’s interests, though NBCUniversal will eventually need to release actual user …read more

Source:: Digiday