True adaptability is about more than just change. Virtually any company can see a change looming over the horizon and shift their operating practices, products and advertising just enough so that they can stay in business. However, the company that truly masters adaptability is the one that not only sees the change coming and learns to survive, but that also parlays the shift into a big win.
Case in point: I read an article the other day on CBS’ intention to launch a streaming service for their content. Aptly named CBS All Access, the site would provide access to shows that are currently being aired, as well as an extensive library of those from the past. The service will come with a $5.99/month price tag and contain around 6,000 episodes.
CBS All Access is designed to complement, rather than compete with, existing streaming services. Marc DeBevoise, executive VP of sports, news and entertainment over at CBS, sums up exactly what they are looking for nicely in this quote:
This product is definitely something we’re using to go after the ‘cord nevers,’ who are not subscribing to a bunch of other larger services that include our content—and there are definitely millions of those people in this country. In terms of cord-cutting or -shaving, our view is that our service is priced to be complementary to the other services that are out there. If you are interested in a large bundle of channels that has a lot of various things in it, you may not be a subscriber to this service. But if you’re deeply interested in one, two or many of our shows, getting our content outside of your home or buying earlier access to our content on mobile devices, then you’re one of our superfans and you’re going to convert.
This statement shows not only a clear understanding of the way digital subscribers like to watch their programming, but it also provides a service primarily aimed at those most likely to enjoy it. Rather than attempt to compete with all of the other entrenched, large-content services, such as Hulu or Netflix, CBS is pitching a niche service designed specifically for “super watchers” of their content.
The groundwork for this approach to the new audience of digital subscribers was laid back in the late-2000s, with the launch of the ever-popular, digital-content subscriber, Hulu. Rather than jump on the bandwagon like network rivals ABC and NBC did, CBS opted to keep this ace up their sleeve for the time being.
The reasons for this were twofold: First, prime-time hits like C.S.I, N.C.I.S. and The Good Wife were just too valuable and important to send to an outside service like Hulu. Secondly, Hulu only offered seventy percent of ad revenue for shows shown on their service. Keeping the shows in house allowed CBS to keep 100 percent of ad revenues.
Another important factor was that when Hulu first launched, digital streaming was still in its relative infancy. No one knew exactly where it would go, as well as how receptive customers would be to a service they had to pay for in addition to the fee associated with cable and satellite television. Sure, watching shows when you want to is incredibly convenient. But would that perk be strong enough to justify the extra expense? Of course, we know now that streaming is the future. But at the time it was still very much in the air. The decision to hold off on signing a binding contract before the market had truly fleshed itself out resulted in a pair of big wins for CBS.
The first was their run in the top spot in the ratings, which they would enjoy for the five years following the contracts signed with Hulu by their rivals. When alphabet-network rivals, ABC and NBC committed to the Hulu service, much of their content was then available to stream whenever customers wanted to watch it. This sucked viewers away from watching episodes on television, which resulted in a drop in ratings for both NBC and ABC. And as any content-related company can tell you, the higher you are in the ratings, the more advertising dollars you are going to score.
The second win CBS gained by being intelligently adaptable is the whole basis for the origin news article: CBS All Access. ABC, NBC, Fox…these are all networks that are slaves to Hulu, due to those early contracts. The option for launching a standalone service simply does not exist at this point in time. That means that the $5.99 that CBS rakes in from each customer who buys All Access signifies a higher profit margin than what can be expected by their rivals.
All in all, CBS has played the digital age almost perfectly. By being not only adaptable, but also in a manner most effective, they have shown themselves to be one of the top players in the industry for the foreseeable future. Sometimes it pays to wait and watch, collecting and processing information in the meantime.