The father of all economists, Adam Smith, introduced the concept of the ‘invisible hand’ in the second half of the 18th century. With the invisible hand he described the economic theory that people do not only act out of self-interest but also serving others’ interests through cooperation: because people realized that through such cooperation they also benefit and ultimately do so out of own self-interest. The concept still holds true these days: the invisible hand is at work almost everywhere – in a connected world, where labor and resources are distributed across borders and many different players contribute to a product or service, such collaboration is almost standard. So collaboration has become the standard across many industries and all types of market. The invisible hand is the glue of almost all our economies.
The glue of television and any form of its manifestation is the invisible cord.
The one that connects content suppliers to the audiences. Without this cord, no-one can access content, no binge watching, no broadcast of live events, no news or entertainment. The invisible cord is the life-line. The cord is often physical: it might come as the broadband access, the cable line, or in a more symbolic sense as the satellite signal or mobile phone coverage. The cord is also symbolized in the device that we use to access TV content. The TV Set, the box or the hand-held device.
The invisible cord has visible providers of it: MSOs, Telecommunication companies, Satellite manufacturers and service providers, Phone gadget, OEMs etc.
The other side of the cord is held by content providers: producers, distributors, TV channels and streaming services and any video-related business.
The self-interest of each of these parties sometimes takes the better of them. They think they can better do without the other. When streaming, for instance, was launched all over the world people thought, they can do away with the cord. Cord-cutting became a new fashion. People cancelled their cable subscriptions and flocked to sign up with Netflix and Co. Mobile access become ubiquitous; who needs an old fashioned cable line when content is available everywhere. And yet: “TV everywhere” is delivered to you by some form of the “Invisible Cord”. The very thing that you thought you get rid of is still the fabric of which TV distribution is woven: distribution infrastructure is the “invisible cord”. Cutting it off is limiting your access to content; making almost impossible to watch it at all.
The “Invisible Cord” Paradox
This is what I call also the “Invisible Cord Paradox” of Streaming and TV, at large. Streaming – with its key feature and benefit of allowing you to consume TV whenever and wherever you want it- created the wave of cord-cutting; it enabled you to cut your cable subscription and still enjoy brilliant video entertainment. The more people cut their cord, the more the number of streaming subscribers grew. The blood lost by one was the very same that nurtured others. Streaming accelerated cord-cutting the more the traditional cable operators tried to fight it. The traditional TV business model started to see erosion in their monetisation structure through PayTV and advertising revenue. At the same time, the content production business entered a new era of growth and demand.
Yet, the cord was always there – albeit in a different shape. Streaming needs broadband, needs a complex delivery infrastructure. A structure that has many players in it, because streaming per se in a widely dispersed system and a service managed by a variety of providers. Streaming relies on the “invisible cord” to live. That is the paradox. And the paradox is that streaming now has to go back to the very cords it helped to cut, to get a new stimulus of growth.
Hence, the underlying idea and pragmatism of the invisible hand is now more true than ever for the invisible cord: you must cooperate to serve your own self-interest.
Bundling is becoming the essential practice for streaming and infrastructure
Enter Bundling: the invisible cord paradox will force more and more streaming businesses to explore bundling options with infrastructure suppliers. They will accept that to share part of their revenue and the end-user-relationship with cable providers, telecoms and similar services. New (old) monetization methods like advertising require them access to large number of eyeballs – constantly, reliably and measurably. Only existing infrastructure can provide that: access for access is the new mantra. Access to the infrastructure in exchange for access to content; access to eyeballs in exchange for access to the consumer relationship. Access to data will be the major treasure over which they will be fighting eventually.
Nevertheless, Bundling will be the key for survival. More though: it will be the key to success for all parties involved. Sharing the customer relationship in a collaborative and trusting manner is ultimately to the benefit of all: most of all, it should be to the benefit of the end-user. A more targeted, tailored bundle product will make them happy in so many ways.
There are going to be hefty discussions and fights over the proper recognition of what each party contributes to such a bundle. However, do not forget: the ‘invisible cord paradox’ can only be resolved by true collaboration and focusing on the common interest rather than the differences.
It can also be resolved by knowing that there are other parties – outside of the ‘invisible cord’ relationship – who eye the market and want a piece of it. They actually prey at a large, valuable piece: the user data.
Watch Big Tech and their plans to short-cut the Invisible Cord
Companies like Google, Meta, Microsoft and probably also Apple – they all play the long-shot in that game. They also hope and work on resolving the ‘invisible cord paradox’ by either preparing their game plan along the sidelines, by trying to establish new rules to the game or by dominating it. Or even building their very own infrastructure.
Data is going to be the token over which they access and dominate.
User data from advertising consumption, viewing habits, content preferences and anything else is a precious asset and will be a key element of handling end-user relationship. Whoever holds that key in the end, will be the preferred and trusted go to service of the consumer. That is why content curation, content discovery and recommendation will become a key battleground. A battle so massive that only the Big Tech seem to be able to fight it. Consequently, the need for bundling and true collaboration becomes even more imminent and important: to hopefully also work together on content data and user satisfaction via combined aggregation engines.
There are early signs now from both ends of the ‘invisible cord’ that indicate we will indeed see more bundling of all sorts. That is encouraging and should be taken seriously. The bundles should also be created in a very innovative way and with a long-term collaboration perspective. They should lay the groundwork for collaboration on content discovery and recommendation. because when content and infrastructure work together with that mission they will bring the greatest value to the consumer – and hence, create a true benefit of the ‘invisible cord’; making the paradox a competitive advantage rather than a nuisance for all.
Remember the concept of the invisible hand from the top? That you serve your self-interest best by looking for opportunities to collaborate. This invisible hand that stirs us to cooperate with other market partners should be your guiding principle to generate value.
We are happy to collaborate with you and explore how you can create awesome bundles and resolve the paradox. Contact us for advice and assistance.