CBS’s new digital subscription video-on-demand service CBS All Access, which the company launched Thursday, isn’t likely to generate a financial windfall for CBS — but it could still prove valuable for the network and consumers. At least, that’s the view of streaming and online video expert Dan Rayburn, executive vice president of StreamingMedia.com.
TheWrap spoke to Rayburn about the new stand-alone service, which offers current CBS programming, previous seasons and classic shows on demand for a $5.99 monthly fee. Rayburn’s verdict? Don’t look for a massive rush of people to buy the service.
“Are they going to get millions of people signing up for this? No, definitely not,” Rayburn told TheWrap.
While CBS’s new service as well as HBO’s upcoming standalone service, which is launching next year, would seem to cater to the cord-cutter contingent who watch content without the burden of a cable bill, Rayburn dismissed the notion that cord-cutters make up a large enough market to have a significant impact.
“Everybody talks about cord-cutting and a la carte, and how big the market is, and the reality is, it’s not. We know what cord-cutting is, it’s small,” Rayburn offered. “There’s not a lot of cord-cutting. There might be millions of people who never signed up for cable to begin with, but I know a lot of those people. The reason they never signed up for cable is that they don’t watch any TV, not that they’re getting content through other sources like streaming or Netflix or Hulu, There’s plenty of people where TV’s just not a fit. They’re just not interested.”
Nor is CBS’s new service likely to open the door for a la carte programming, said Rayburn, who noted that the economics don’t add up.
“Nielsen basically said the average cable TV consumer watches 17 channels. Let’s say they only watch 10 channels — let’s cut that number almost in half. If every single one of those channels were doing a la carte and I’m paying six dollars per channel like CBS, I’m now spending more a la carte than I am if I get a triple play package [of cable, internet and phone service],” Rayburn said. “The economics just don’t make sense. I read a lot of people who wrote about CBS saying, ‘This is the start of a la carte programming,’ and it’s not.”
Rather than a money generator or an immediate game changer, Rayburn suggested that the new CBS service, and services from other networks, should they follow the same path, will be more a tool for testing the waters.
“I look at it like the Redbox/Verizon deal. Most people knew going into that, that wasn’t going to be successful. But they tried it anyway,” Rayburn said. “That’s what’s going on. It feels like so much experimentation taking place in the market, but it’s not real business.”
All that said, even if CBS doesn’t rack up millions of subscriptions — and even if much of the content that the service offers is already available over the air for free — there may be some consumers who find the $5.99 subscription fee worth it.
“There’s a perceived value. Instead of having to go get an antenna, and instead of having to watch it when it’s on, because there’s no way easily to record what’s over the air through DVR, they’re simply saying, ‘OK, we’ll make it easy for you,'” Rayburn said. “It’s available whenever you want it, in one place, without an antenna. OK, you have to pay a couple bucks for that. I think that’s fine.”
And while an army of subscribers likely won’t be rushing to sign up for the service, CBS will still see benefits from the service, in the form of consumer data.
“I think it’s smart of CBS, because what are they going to do? They’re going to collect demographics, they’re going to do surveys: ‘OK, well who is interested in this, and what price point do they want to see? How high definition do they want it to be, and what devices do they play it back on?'” Rayburn said. “So it’s great market intelligence. Is it real business? No.”