Just like how the Internet brought the empire of print media and the music recording business down to their knees, big cable providers like Direct TV, Comcast, and Time Warner Cable are now being forced to reduce their prices due to supreme competition from online Television. A regular cable subscriber gets HBO for $17.99, Spanish package for $24.99/month and ends up paying more than $80 a month (if you include Set Top Box charges). When you compare this with the average Internet T.V fare, which is a mere $7 to $9.99/month; going digital seems like a reasonable choice for a common man.
All high-fidelity broadcasters like NBC, ABC, ESPN, etc are speaking against competitors who broadcast their content online. For obvious reasons, they are reluctant to share the rights of their popular shows with their online competitors like Netflix and Amazon Prime. However, according to title VI of the Communications Act, cable companies cannot refuse to sell the rights after one year of a show’s premiere. Federal Communications Commission chairman Tom Wheeler promptly cited this recently.
Why The Internet Is Ahead of Television?
According to Leichtman Research Group Inc, the top nine cable companies lost more than a million subscribers in the last two years! 2013 saw 1,195,000 subscribers opting out, whereas in 2014 the number was 1,695,000
This report is a clear indicator of how internet TV providers are moving ahead of cable service providers. Netflix now boasts over 50 million members in 40 countries, including 36 million just in the United States! But with over 100 million cable subscriber still to hop on to the internet bandwagon, it might take the internet another 5-10 years to completely overtake cable TV dictatorship in this growing democracy of the entertainment business.
Why the mad dash towards internet TV?
Availability of content anytime anywhere is the main advantage for Internet T.V providers. Binge watching, which used to relate with a nerd downloading and watching the whole series in one go through BitTorrent is now being related to the subscribers of Netflix. Netflix even provides their original series to their subscribers in one go.
The growing popularity of devices like Google Chromecast, Amazon Fire TV Stick, TiVO Digital Video Recorders, Logitech Revue etc people are finding it easy to shift from traditional cable TV to internet TV.
Fighting The Competition:
Many leading programmers (HBO, NBC, CBS, Fox etc) are against the ruling of FCC; which names internet content providers as multichannel video programming distributors (MVPDs). This inclusion will force programmers to negotiate with internet TV providers just like they do with cable companies. Thus making cable specific soaps like Big Bang Theory available simultaneously on Hulu or Netflix in the later years.
Due to this new rule, broadcasters are now starting their own digital networks for their T.V shows. H.B.O launched HBO GO to divert their cable audience’s onto their website and also launched HBO NOW for the users preferring to watch only selected content like “Game of Thrones” without subscribing to their cable network.
The business model of authenticated video-on-demand (TV Everywhere) was introduced to compete for the market trend of “Cord Cutting” where cable users started migrating to internet tv providers like Netflix, Hulu, and YouTube. To fight this competition, broadcasters have already launched their online platforms like WatchESPN, BTN2Go, Bravo Go, CTV Go etc. But the reception of these subsidiaries has not been welcomed by the media, citing that the customer will be the loser in this heavy corporate fight.
But Television Is Still Strong:
Sports! This is cable TVs ultimate calling card when things get difficult in their attempt to beat internet TV. Cable providers are reducing their prices to attract online viewers; charging a basic $59.99/mo to a premium of $159.99/mo for channels like the NFL Network, NBA TV, NHL Network, MLB Network etc. As long there is football (NFL), soccer (MLS), Ice Hockey (NHL), baseball (MLB), Car racing (NASCAR) and wrestling (WWE,TNA) in America; cable tv might not see the fate of a lost Atlantis in the ocean of entertainment.
Netflix CEO Reed Hastings anticipates that sports networks that have had such success in maintaining an audience will ultimately adopt an on-demand model.
Advertising will be the bedrock of future developments for Internet T.V based companies. INTX hackathon where teams developed projects to re-imagine digital entertainment; showcased a platform to allow post-production insertion of native advertisements. This can help companies place product ads in any tv show, thus providing a great opportunity for advertisers to leverage online tv platforms.
Another factor which may dilute this competition is by initiatives like Sling TV and Playstation Vue; where there is custom made channel bundles encompassing popular channels and series. Apple TV is another competitor which provides small bundles of channels like Disney, Discovery, ABC, CBS and Fox for cheaper rates, just like what they did for the music industry by giving options to buy a single song instead of the whole album.
In Google’s recent comment in London’s Battersea Park to the advertisers to shift 24% of their TV budgets to YouTube for better accessibility to the targeted audience proves that there will be a strong shift in the watching habits but there is no certainty as old habits die hard.
So, what’s your perception towards the rising trend of cutting the cord? Is cable T.V better than Internet T.V ? Comment below and let us know.
Being an artist, movie buff and a media enthusiast, content writing is my career train. I am a proud alumni of Symbiosis Institute of Media Communication (Pune) and currently working for Vidooly.