Company / division: AMC Networks
Back in March, there were reports that AMC was looking to provide an ad-free version of its TV network through pay TV operators, though the specifics weren’t then known. Today, AMC and Comcast have announced that the service will run (for now at least) as a partnership between them, providing AMC Premiere as a video on demand service through Comcast’s set top boxes and apps for $5 per month. As I said in March, that’s a hefty price for a network which commands just a fraction of that from pay TV operators each month, and which generates only half its current revenue from advertising. It may have decided that pricing a service below $5 per month devalues it, but the $5 price point clearly overvalues it, especially given that it won’t be a standalone service – in other words, you have to be an Xfinity pay TV subscriber to be able to get the service, so this is an add-on to the standard AMC channel, not an alternative to it. Taking a step back, the move clearly taps into a broad consumer push to get ad-free TV, something which Netflix has always offered and Hulu has made something of a default recently too for VoD. And of course competitors like HBO have never had ads either, but they also have massively more content including lots of big-budget original content to justify a higher price. This feels like a good concept in principle, but both the wrong channel to apply it to and the wrong price point for what AMC actually offers. I’m looking forward to better applications of the same idea from other content owners.
This is an interesting wrinkle on the theme of premium TV channels going direct to consumer. In this case, AMC Networks is talking about going through the pay TV companies rather than around them, which would ensure high-quality distribution but would also limit it to those audiences already paying for traditional TV services, whereas its stated target is the millennials who famously don’t pay for those services. The price being talked about also seems very high: the AMC network is pretty cheap for pay TV distributors – one recent figure I saw suggested under 50 cents per month – so charging $5-7 just to take out ads seems steep. As a company, AMC makes a little over half its revenue from fees, and the rest mostly from ads, so charging ten times as much as it charges distributors just to remove ads doesn’t feel quite right. But it’s good to see the traditional cable networks experimenting with a variety of models as they try to stem the tide of both cord cutting and cord shaving, even if this doesn’t feel like it’s quite going to hit the spot.