Content a Better Investment Than Distribution, Says Investor
Hulu and Sony’s streaming TV services are unlikely to survive for long, said David Bonderman, founder of private equity firm TPG, part owner of Univision, at the opening of the University of Colorado’s Silicon Flatirons Center conference on monetizing video programming Tuesday. Bonderman said investing in content is safer than investing in any particular form of delivering that content. “The tech is gonna continue to shift, but what isn’t gonna shift is people’s attachment to certain kinds of content,” he said. Bonderman said a recent attempt to sell Hulu failed because investors were “skeptical” that content providers would allow the streaming TV service to survive as an independent entity. “In the long term the odds are against success,” said Bonderman.
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Sony’s streaming TV offering is doomed to fail because of the company’s incompetence, said Bonderman, who said he blamed the consumer electronics company for losses in its buyout of MGM, a transaction in which TPG partnered with Sony. “On a historical basis, Sony hasn’t been able to pull off anything since the Walkman,” said Bonderman. “I wouldn’t trust Sony to do anything at any point in time,” he said. He said a possible reliance for the service on the PlayStation videogame console will likely be a hindrance on Sony’s streaming TV offering. “I think the PlayStation is a thing of the past,” Bonderman said. Companies shouldn’t rely on specific hardware in a time when multiple kinds of content are available on many different devices, he said.
Netflix may also face a long-term problem, he said, despite its currently successful method of delivering content. “Distribution is always changing … this is a volatile business,” said Bonderman. He said he wouldn’t bet against Netflix in the short term, but he would be “astounded” if Netflix is still as successful in 20 years.
Bonderman compared a la carte cable to the shakeup in the music industry caused by Internet sharing. He said just as music consumers increasingly demand the ability to listen to particular songs without purchasing a whole album, cable consumers will demand and get a la carte cable. “The music industry means a la carte is going to triumph,” he said. Bonderman compared a la carte to the Affordable Care Act, calling bundling an “insurance scheme” where those who pay subsidize those who don’t. Insurance companies don’t want the insurance scheme to end, he said.