Cable Companies: Now in the Business of Streaming
According to Deloitte, 69% of consumers now pay for video streaming services, while only 65% of consumers pay for cable or satellite.
What’s interesting here is that the 69% paying for streaming today was merely at 10% a decade ago in 2009. That surge in growth hasn’t stopped either with streaming service subscription in the U.S growing 10% compared to last year. Mirroring this growth is that of cord-cutting with research from Nielsen, showing a 48% increase in satellite and cable TV customers churning over the past 8 years.
So why is this happening?
Streaming is the new preferred consumer option for entertainment. It’s gaining traction rapidly, particularly with younger audiences, due to its cheaper price points, the strength of original content, and on-demand delivery model of entertainment.
Today, the big three, Netflix, Amazon Prime Video, and Hulu are fighting to capture all the share of a streaming market poised to be valued at $125 billion by 2025.
That’s an attractive market and traditional cable companies are now beginning to take notice. They’re investing heavily in launching their own streaming services, and some have already tried.
Cable companies with streaming services
Comcast has already announced Xfinity Flex, a $5 per month streaming service available to its customers and comes with over 10,000 ad-free movies, TV shows, and even live TV channels such as ESPN3. Users can also integrate their other streaming subscriptions such as Netflix into the platform for a one-stop-shop user interface to access all their media options.
Viacom has also made moves recently to entire the streaming market by acquiring Pluto TV and launching Viacom Digital Studio in 2018. Both acquisitions were made to create more original content and introduce a streaming platform. Leveraging their existing show formats and fans but delivering content in the way consumers prefer them today – on-demand and cross-platform.
Bell Media has also gotten into the game in Canada by launching Crave and has partnered with major production companies such as HBO, Showtime, and Starz to offer their programming.
AT&T has DirecTV and WatchTV but will also leverage its acquisition of Time Warner to introduce a streaming service and gain access to its expansive selection of original programming from HBO, Cinemax, and Warner Brother media houses.
Dish Network also has Sling TV that was launched in 2015 and designed to be its streaming platform for their original programming. It comes with popular live TV channels such as AMC, Food Network, and Lifetime.
In my own viewing area, EPB has leveraged their ability to provide gig internet that is 10 times faster than its competitors in order to promote their new streaming service, EPB Fi TV. They offer 6 simultaneous streams, and an impressive array of on-demand titles, all without the physical hindrance of an actual cable box.
But are these moves by cable players successful?
It’s hard to tell as they’re so new, but moves made by NBCUniversal to enter the market with Seeso in 2016 put forward a cautionary tale. The on-demand streaming platform quickly shut down in 2018 after growth and interest were lackluster.
These cable companies are all making quick moves through in-house product development and acquisitions to get a foothold into the streaming market. There’s a reason for this as competition is expected to intensify when Disney and Apple launch their own streaming services. Disney has even promised to introduce it’s steaming platform Disney+ at a jaw-dropping $7/month price point.
Who will win in the end?
Ultimately, the consumer’s desire to access as much content as possible, in an on-demand fashion, will dictate whether cable companies are successful.
A strong argument for why cable companies with streaming services will be successful is due to the fact that Netflix pays an inordinate amount of money to offer content from other studios on its platform. And the same can be said for Amazon.
If those rights to content were revoked, the attractiveness of the platform to customers goes away. It’s already happening with any Marvel universe content and NBC produced shows. The most popular streamed shows on Netflix in 2018 – The Office and Friends, will no longer be available on Netflix, as they are slated to launch on Disney+ in the future.
Cable companies, on the other hand, are great aggregators of content and have spent many years gobbling up production studios as well or establishing partnerships with them. Cable companies are also now part of larger media families that own production studios, or they’ve grabbed a significant stake in them to form partnerships, as Time Warner has done with Hulu.
This means they have more leverage compared to independent players such as Netflix or Amazon. In the future, it’ll only make sense financially for consumers to sign up for Comcast’s streaming service where one will have access to live programming and popular content from its various partner studios.
In summary, the future of TV may look a lot like it does today, minus the need for any bulky hardware, that is, but with cable companies owning a share in specific markets and retaining their subscribers with attractive bundled media options. The only key difference is providing its programming across platforms and on-demand the way companies like Netflix do today.