This is the logo for an Australian service called Fox Sports 1. The US service may very well have a different logo. |
- Outdoor Life Network becomes a general sports service as NBC Sports Network.
- College Sports TV becomes a general sports service as CBS Sports Network.
- American Movie Classics (now just AMC) branches out into producing original dramas, moving away from classic movies.
- Court TV dramatically reduced its legal coverage and becomes reality-oriented Tru TV.
- Bravo dramatically reduced its arts coverage and become a more reality-oriented channel.
- History expands beyond historical programming to add reality shows.
Essentially these programmers decided it was better to share or compete in a bigger niche than to own their current, smaller one.
For the programmers (and the distributors), these new services, rather than having protected niches that allow them to acquire and produce quality programming inexpensively and promote it efficiently, are now bidding against a large number of other channels for many of the same programs and having to promote widely to reach a wide audience. In a word, cable programmers have, in effect, become broadcasters.
The impact of this is that instead of getting services tailored to underserved niche audience (that communicates the variety of programming on the cable dial), the dial now has more me-too services. Attractive, well-programmed services, but me-too services nonetheless and the cost of these new services to distributors is substantially higher than the cost of their nich-ier predecessors.
In fairness, when multichannel penetration is 85%+, there simply isn't much upside left to attract new cable subscribers. However, on the surface the move to "broadcasting" actually seems like a poor strategy for programmers. It is generally more desirable to grow from a protected niche than to leave that niche. By this I don't mean that the business should stay small in its niche, only that it should endeavor to expand and strengthen what Warren Buffet calls the "economic moat" that protects the business.
There is certainly nothing wrong with a service retooling itself to become more popular. SyFy has continues to serve its science fiction niche with far more original and expensive programming than it ever had as the Sci-Fi Channel.
Below the surface, the logic of the programmers' moves looks clearer. The programmer's fear is that the niche turns into a dead end. Once Pro-Am Sports System lost its rights to the Detroit Red Wings hockey to Fox, the writing was on the wall and its owners closed the service. AMC faced the issue of a dwindling supply of classic movies when Turner Classic Movies entered the marketplace -- it had to do something different. Similarly, when Fox Soccer Channel lost key fĂștbol rights, there wasn't much it could do to maintain a service of similar quality in that genre. A general sports service can substitute other sports programming; the Golf Channel can't start running baseball or lacrosse or poker.
For the programmers (and the distributors), these new services, rather than having protected niches that allow them to acquire and produce quality programming inexpensively and promote it efficiently, are now bidding against a large number of other channels for many of the same programs and having to promote widely to reach a wide audience. In a word, cable programmers have, in effect, become broadcasters.
The impact of this is that instead of getting services tailored to underserved niche audience (that communicates the variety of programming on the cable dial), the dial now has more me-too services. Attractive, well-programmed services, but me-too services nonetheless and the cost of these new services to distributors is substantially higher than the cost of their nich-ier predecessors.
In fairness, when multichannel penetration is 85%+, there simply isn't much upside left to attract new cable subscribers. However, on the surface the move to "broadcasting" actually seems like a poor strategy for programmers. It is generally more desirable to grow from a protected niche than to leave that niche. By this I don't mean that the business should stay small in its niche, only that it should endeavor to expand and strengthen what Warren Buffet calls the "economic moat" that protects the business.
There is certainly nothing wrong with a service retooling itself to become more popular. SyFy has continues to serve its science fiction niche with far more original and expensive programming than it ever had as the Sci-Fi Channel.
Below the surface, the logic of the programmers' moves looks clearer. The programmer's fear is that the niche turns into a dead end. Once Pro-Am Sports System lost its rights to the Detroit Red Wings hockey to Fox, the writing was on the wall and its owners closed the service. AMC faced the issue of a dwindling supply of classic movies when Turner Classic Movies entered the marketplace -- it had to do something different. Similarly, when Fox Soccer Channel lost key fĂștbol rights, there wasn't much it could do to maintain a service of similar quality in that genre. A general sports service can substitute other sports programming; the Golf Channel can't start running baseball or lacrosse or poker.
is poker a sport? |
While distributors always complain about the cost of cable channels, the strategy of investing heavily in programming, especially when the channel's distribution has been built, has long been a far more successful strategy for channel operators than putting on less attractive programming with modest spending. If it were in the business interest of the distributors to to support the latter strategy, they would have done so.
For a sports programmer, the move from a single sport niche to a general sports service seems to be moving opposite the trend of the last fifteen years which saw the launches of services dedicated to sports niches: Golf, outdoor sports (Outdoor Life, Outdoor, Sportsman), motor sports (Speed), Tennis, Fox Soccer, Gol TV, MLB, NFL, NHL and NBA. Obviously, the league-owned services do have the strategic advantage of controlling the supply of relevant rights.
The large programmers already an "economic moat" from their scale in providing a critical mass of programming, it need not be a channel-by-channel thing. It is not a feasible decision for a major distributor to simply do without CBS or Fox or Disney/ABC/ESPN or NBC Universal. Covering all the broad channel niches (news, sports, kids, women, etc.) can help on the cost side, too, by allowing the programmer to utilize just about any programming that is either (a) lying around in a library or (b) is bundled by a program seller into a package with something the programmer really wants (e.g., Weinstein's films were bundled with Project Runway for sale to Lifetime) and that is a plus. So the niche strategy that works well for an independent channel, like Speed's predecessor Speedvision, might have outlived its usefulness in a major programmer.
Updates (5 March 2013): Fox COO Chase Carey on the Fox Sports 1 investment (deadline.com); coverage of the official announcement (New York Times); official logo unveiled -- more bug-shaped, I guess the yellow trim was a no-go; I assume the football-like shape is no accident
Updates (5 March 2013): Fox COO Chase Carey on the Fox Sports 1 investment (deadline.com); coverage of the official announcement (New York Times); official logo unveiled -- more bug-shaped, I guess the yellow trim was a no-go; I assume the football-like shape is no accident
Related: New Names for Cable Networks