Content is king. “Long live the king,” hath proclaimed the content providers.
Yet, is it? From a satellite carrier perspective, this is an important question. If content is king, then it will always rule. Always. That’s what happens when you are king. No one takes you off the air at will. No one makes an exclusive contract leaving you out. Because content is king. Yet, when you are the system who carries the content, it is useful to know where you stand in the kingdom.
Let’s take the recent Time Warner-Disney scuffle, which found two U.S. heavyweights (the former the carrier, the latter the content) in conflict. When talks broke down, Time Warner, with the cable pipe into the home, put the following on screens in the affected cable TV districts, “Disney has taken ABC away from you.”
The story was obviously more complicated than that. The negotiations that stalled were all about how Time Warner was willing to compensate Disney for carrying Disney’s content — ABC TV stations — on its access or distribution system, the cable into the home.
Disney’s content was king? Clearly not. Of course, these types of disagreements aren’t new. It is certain that News Corp. hasn’t forgotten its year-long war to get Fox News Channel carried by Time Warner.
And might contractual disputes be common in the future, affecting all access systems including satellite systems such as DirecTV, Echostar and BSkyB, leading to a discontinuation of content?
The rule, “Content is king,” somehow doesn’t seem to work.
Enter Ingley’s Rule. Access systems and content are royalty but it is the consumer who bestows the crowns. Under certain conditions, access is king and content queen. Under different conditions, content is king and access is queen.
Ultimately, the consumer decides.
But that consumer may be limited in choices — because there is another very important criteria for who gets the crown of king: open access.
Open access means that anyone can negotiate to be carried by the distribution system, be it satellite, cable or DSL.
Right now AT&T Broadband cable systems only carry Excite@Home with the company saying that it will open its cables to other ISPs once its contract expires in 2002. That means that systems — other than Excite@Home — are left out in the cold by an access company.
That’s from the company viewpoint. Now let’s take a look at some current scenarios from a consumer viewpoint to see how access systems and content are working in the marketplace and then look at how this may evolve in the future.
Say you are a consumer who wants a broadband multimedia high speed interconnection into the home via the Internet. Satellite systems don’t give you very many choices right now so you go with a digital subscriber line or DSL, a terrestrial upgrade of your copper wire into the home.
DSL is provided by the local exchange carriers (LECs) or Baby Bells and others.
You’re excited. You’ve chosen a DSL from Bell Atlantic, the LEC in your area. Now you can use your ISP and go into sites that you’ve never visited. Then you ask how you transfer your ISP to your DSL account and you find out they don’t carry your ISP.
So you find out there is a short list of ISPs that have partnered with Bell Atlantic including its own ISP.
Okay. Let’s say you are willing to compromise and give up your ISP. You become a DSL devotee.
Now let’s say a two-way satellite service via the Internet comes along and it is priced competitively. Will you change your pipe if they have better content, perhaps that treasured ISP that you gave up?
You chose Bell Atlantic and let access be king. But you may switch to a two way satellite service because you think content is king.
Confusing? It is.
What is going on behind the scenes that might clarify the situation here?
For the access and distribution providers, it is all about revenue streams and putting together a content-service package that appeals to the consumer (and that may mean mixing and matching technologies). All the pipe carriers — DSL, cable, satellite — get revenue streams from the content that they carry. These revenue streams must be negotiated and renegotiated once the contract expires. So, in this sense, the pipe or access is king.
Yet if the access carrier loses the customer by not carrying content, then it loses its king status.
How will this shake out? What is the consumer going to be looking for in the future?
My best guess is that the future consumer wants a package of voice, video and data that also allow some flexibility in content.
That consumer also wants a package that requires the least amount of maintenance and has an easy billing system.
In the end, the consumer doesn’t care what the technology is.
Consumers want user-friendly access, compelling content and the ability to choose content in certain instances — all at the right price.
Ultimately, it is the paying consumer who rules.
Yet, it is the company that combines access with content in such a way (including price, billing and packaging) that it stays five steps ahead of the consumer that will win the broadband multimedia sweepstakes.