It’s a good time to be a cord cutter.
First HBO, then CBS announced plans to offer stand-alone streaming services to those without cable subscriptions. It was called a watershed moment for cable TV and sent a strong signal that the mythical a-la-carte model for the industry was a real possibility.
onlineTV.jpgAs most other media industries – from newspapers to music – can attest, the Internet is a disruptive force and will eventually compel you to rethink your business model. And the cable industry was in desperate need of a makeover. Why it didn’t happen sooner is the real question. Pay TV subscriptions have been on the decline since 2011, hitting an all-time low of 40 million subscribers in 2013. And according to ComScore, among the coveted 18- to 34-year-olds, 24 percent don’t subscribe to cable TV at all.
Cable companies seemed to react by forcing even more channels on their subscribers. In fact, in a May 2014 Nielsen report, as offerings grew, audiences tuned into the same 17-ish channels year after year.
All the while cable companies raised subscription rates, from $90 on average to an estimated $123 by the year 2015 and $200 by 2020. Cable wasn’t getting the hint.
Content creators can now be emboldened by the slow but steady progress of low-cost providers-turned-producers like Netflix, Hulu, iTunes and most recently Amazon Prime. You can be part of the cultural conversation and watch Orange is the New Black without being saddled with a cable bill and an unnecessary bundle of unwatched channels.
It is a game changer for television, but not in the way many people hope. As much as we hate the monopolies imposed by cable companies and the forced bundled packages in order to get a few of our favorite channels, cable companies are not going away. CBS announced, for example, that the NFL will not be included in its online offerings. So sports fans are out of luck. Additionally, cable broadband will be in high demand as more and more viewers look for high-speed service. Their monopolies will be dismantled, however, as audiences can choose between cable providers and services provided by telecommunications companies like Verizon and AT&T.
Who will really suffer will be the content creators for less resource-rich companies who don’t have the heft of more popular channels like HBO. The Internet democratized a lot of content, allowing for niche voices to find a place to be seen or heard. But within television programming, those niche stations and independent voices – like those on LOGO or Ovation, consistently ranked as channels with the lowest viewerships – will struggle to find an audience willing to pay for it. Or they’ll have to look to alternate modes of distribution to survive.
There is still a lot up in the air, and who survives and much less thrives in this new landscape is yet to be determined. But one thing is for certain, if you look to cable TV in two to five years, you probably won’t recognize what you see.