Is it possible that a deal between an obscure cable channel and a slightly less obscure provider of streaming video could mark the beginning of the end of cable TV’s business model?
In a deal that marks a major departure from how both cable and streaming media now operate, WealthTV will make its cable content available through Roku’s set-top box as a “linear” channel just like its cable channel. The channel will cost Roku users $2.99 a month, and includes access to on-demand content. The news was first reported by PaidContent.
Most cable channels don’t have that option, since the agreements they sign with cable networks like Comcast and Time Warner prohibit them from doing so. This “would be a bigger deal if WealthTV [were] a popular channel,” writes Jared Newman of Technolgizer. “But it’s precisely because of WealthTV’s insignificance that this news has big ramifications for the future of TV.”
Cable networks bundle their programming so you can’t just buy this channel or that channel a la carte. In a world of a la carte choices, many smaller channels – like WealthTV – could fail for lack of demand.
The WealthTV deal is “the first domino to fall,” Roku executive Ed Lee told PaidContent. There are talks for more such deals, he said, without offering details.
WealthTV has avoided signing exclusive agreements with cable providers, which is one thing that has kept it so small (the other being that it’s kind of cheesy – the company actually refers to it as “vicarious living programming”). The channel is all about watching how the wealthy live their lives, with programming like “Etiquette 1010”, “Palatial Passport,” and “Wealth on Wheels” (pictured above). It has deals with Charter Communications and Verizon, but not with Comcast or Time Warner. But that has also made it possible for the channel to be a potential pioneer in breaking the cable oligopoly on linear programming.
“This is the kind of channel that could get forced out if a significant number of big-name channels went a la carte,” Newman writes. But “this move gives WealthTV greater visibility with the possibility of more monthly revenue. Considering that most channels collect pennies per month for each cable subscriber, WealthTV has a lot to gain at $3 per month.”
For more on the disruption of the TV industry, see Ty Braswell’s opinion column from yesterday, Why 2011 will be do-or-die for TV.