We have all heard the catch phrases … the new norm, things may never return to the normal, business offices are doomed, “Zooming“, WFH (know what that is?), religious services on YouTube, etc. We are dealing with disruption of our daily lives due to the pandemic.
However, did you observe another disruption that was brewing? Structured strategically, but aided by several incidents and market occurrences. It has become a cup of coffee.
Snapping the Cable
I did it last year. Tired of paying over $200 per month for many services (channels, landline) that I was not using. The national surge in “snapping” the cable from the various providers and transitioning to streaming content. Paring down the information transmission from landline phones, hundreds of TV channels and internet service to use the need for internet.
The beginning of the cord cutting began slightly in 2015; with about 1M households using their scissors. According to a 2019 study by eMarketer, the number of PayTV households dropped 13.9% from 2013 — 2019; a loss of 14M households. The study asserts that Millennials do not see the benefit of paying high monthly fees for traditional cable services. A recent research study by eMarketer contends that 46M households will eliminate Pay TV service (from 2019 — 2014).
Sidebar — Discussion on the Revenue Stream of PayTV Communication Companies
Household cord cutting was not the only reduction. According to the WSJ, the closing (and pausing) of commercial businesses due to the Coronavius affected PayTV subscriber losses.
A revenue “doom” for the traditional communication service providers. But that is just the beginning.
Breaking Traditional Shopping
No, this is not the normal conversation of online shopping taking over (hold on to that). The market “stranglehold” of PayTV households maintained a monopoly of shopping at home.
The invention of the dreaded infomercials in the 1960s created a new industry through the 2010 decade. Remember the beginning with the Ginsu Knife? Trivia, it was invented by Barry Becher in Warwick, RI (yayy for RI!). These new marketing bonanzas then turned into the cable TV shopping channels (QVC and HSN); peaking in 2017 with HSN purchasing QVC. However, from 2013 — 2018, income fell by $1.1B (15.5% decrease). Recent statistics by Digital Commerce found that QxH (QVB and HSN) declined 3% YoY in 2019-Q4 and 2% YoY for 2019.
Not surprisingly, it is important to note that sales have risen due to the pandemic. The recent effect for the cable TV shopping channels for every metric (sales, viewership, website traffic, social media) are all on the increase. Their target demographics market coupled with the WFH clearly helped their revenue stream.
The Coffee Poured with an Amazon Smile
Before QVC and HSN combined their power, I pondered that this would assist them to thwart any attacks from other retail channels (online, hybrid, pure play) and businesses. Then I thought, Amazon should be doing this? I’m disturbed I did not write a blog about this earlier.
We teach that disruption often occurs when the barrier to entry is low (in capital, expertise, business models, etc.). Hmmm, Amazon has all of that? Like their entry into the prescription drug market (yes, I did write about that before), they bought the expertise. PillPack was purchased in 2018 by Amazon for $500M; not even a rounding error on any of their metrics.
Pouring the cup of coffee … What did they do now? In early 2019, Amazon Live. They have already dominated (like Hallmark, Netflix, Disney, etc.) the content generation of documentaries, series and movies. They develop videos to showcase and sell their products. How is this any different? They already have the warehouse, logistics, technology and ordering infrastructures. just add a studio and a website link to the online show.
The video streaming shows will promote their products for sale on Amazon using a carousel under the video streams. Imagine how cosmetics, clothes, home and other products that can gain from a live host creating an “in store” connection with a viewer and prospective purchaser.
Take-Aways
So to unpack here and while you sip your coffee.
- QVC and HSN are new organizations today.
- They have reduced their reliance on cable and pay TV and increased their reach by broadcasting their signal over the air received by a home antenna or devices like Amazon Recast.
- Online shopping continued transformation of brick-and-mortar channels.
- Homebound people now have another alternative for infomercial-type shopping through Amazon Live.
- The pandemic creating more online purchasing and delivery of consumer needs.
Ginsu Knife and “Set It and Forget It” … here it comes again. Ron Popeil and Barry Bacher must be smiling at what they started.
I am sure Amazon is sipping that coffee now.