How CBS Developed Its Digital Chops – Wall Street Journal
CBS is probably not the first company that comes to mind if you had to name a digitally savvy entertainment brand.
Yet the broadcaster’s success in limiting how much of its content is available from third-party digital distributors and instead focusing on its CBS All Access streaming service has taken rivals by surprise as it has signed up some 1.2 million paying subscribers, as The Wall Street Journal reports.
How did a staid old broadcaster get here? Some television executives chalk up CBS’s digital chops to its decision not to invest in Hulu alongside Fox, NBC and Disney (and now Time Warner). That forced it to come up with a streaming strategy for its library of shows and movies that differs from its peers.
When some rivals were initially pouring money into Hulu, CBS instead bought CNET Networks Inc. for $1.8 billion in 2008. Industry executives scratched their heads, but the deal gave CBS an online platform to build on and to help attract digital talent in San Francisco and New York.
Because of the CNET bet, “they have the history of understanding how to monetize digital properties” independently, one senior pay TV executive said. Even as others like HBO tapped outside help like Major League Baseball spinoff BamTech to build streaming apps, CBS built All Access in house.
As of October, CBS Interactive, the company’s digital division, ranked as the sixth-largest digital media property in the U.S. with 165.7 million unique visitors, ahead of its media rivals, according to comScore.
CBS’s decision not to invest in Hulu also forced it to figure out what to do with its library and current seasons of shows after they air. When CBS has struck licensing deals with Hulu, Netflix and Amazon for U.S. streaming rights, it has tended to carve out the right to also offer the shows on its own streaming service. For example, old seasons of “CSI” are exclusive to Hulu among streaming aggregators, but those episodes are also available on All Access.
The network has rebuffed requests from its traditional partners like Comcast who want to offer full current seasons on their video-on-demand platforms, instead stocking up All Access with the complete set of catch-up episodes for such shows as “Blue Bloods.”
CBS is also seeking more from its suppliers. As part of broader conversations to renew TV rights with Warner Bros. for “The Big Bang Theory,” CBS is also seeking to offer All Access streamers the full current season of the show on demand, so viewers can catch up if they missed earlier episodes, a person familiar with the matter said. Today, only a few of the most recent episodes of the sitcom are available to stream on the service.
But even as it has turned its digital attention in-house, CBS continues to tout an unusual “friendship” with Netflix, the global streaming juggernaut that became the poster child of digital TV disruption.
CBS has aggressively struck deals with Netflix for global rights to shows like “Jane the Virgin” even as other media companies have been wary of making Netflix even stronger worldwide. That is partly because CBS’s international business is small in comparison to that of its rivals.
Last week, CBS Chief Leslie Moonves said Netflix’s purchase of “rest of the world” rights to the new edition of “Star Trek” made it essentially free for CBS to carry on All Access as its first original series.
“Netflix, to us, and I know controversial to some of the media companies, is truly a friend,” he said.
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