The rise of streaming video Could this mean the end of cable?

February 5, 2020

 

 

The television landscape is changing and binge-watching culture is on the rise as over-the top (OTT) media services are poised to replace cable as the main source of video entertainment. OTT services allow subscribers to stream video content over the internet and include Netflix, Hulu, Amazon Prime and similar services.

 

I’m a binge-watcher myself and can relate to the convenience of watching at my own pace and attraction of the other benefits OTT services offer, like subscription options that are free of commercials, no additional fees for equipment rental and no contract.

 

This is a national, if not global, trend. According to data released by the U.S. National Telecommunications and Information Administration in 2019, the number of Internet users watching videos online increased from 45 percent in 2013 to 70 percent in 2017.

 

Some of the best content out there are produced by and streamed exclusively on streaming services. Hulu’s original series, The Handmaid’s Tale, and its cast have won several awards from 2017 to 2019, including 2019 Primetime Emmy Award for Outstanding Guest Actor in a Drama Series and Outstanding Guest Actress in A Drama Series, and 2018 Golden Globe Award for Best Television Series – Drama.

 

As 2019 ended, Netflix announced that a majority of the top streamed shows on its platform were Netflix Originals, including The Witcher (which had only been released for a week at the time of the announcement), Stranger Things, Murder Mystery, The Umbrella Academy, The Irishman, Extremely Wicked, Shockingly Evil & Vile and 6 Underground.

 

According to BMO Capital Marketing, a Wall Street firm, Netflix spent $17.3 billion on content development in 2019 and forecasts that the streaming service will invest a total of $26 billion by 2028.

 

For viewers who have favorite network TV shows and don’t want to wait for them to be available on a streaming platform,  almost all major networks have their own app or website where viewers can stream the most recent shows as soon as the next day, including NBC, The CW, CBS, Fox, ESPN, TFC, HBO and ABC. The news is free and readily available online.

 

Some OTT services, such as Sling TV provide cable network content online with the linear schedule that cable enthusiasts prefer, while others like Hulu offer live streaming of cable programming and coverage of events. It’s only a matter of time before these services are available in Guam and the Marianas.

 

Streaming over the internet is already the main method of video entertainment in the CNMI.

Market saturation has kept subscription pricing affordable. There are plenty of services to choose from, each with their own benefits and content.

 

For a fee of $8 to $15, subscribers get access to entertainment libraries hosting thousands of television shows and movies. There are so many streaming services available and it’s not uncommon for households to be subscribed to more than one service.

OTT services are gaining subscribers every year.

 

Hulu announced in January 2019 that it added 8 million subscribers in 2018, reflecting a 48 percent subscriber increase year over year, catapulting Hulu’s customer reach “beyond that of the country’s largest cable and satellite pay TV subscribers.” In a letter to shareholders regarding its third quarter revenues in 2019, Netflix stated that its revenue is up 31 percent from the prior year with more than 158 million members.

 

Last year, Apple and Disney entered the game. Apple launched Apple TV in November 2019 with original content, including The Morning Show, which has already been nominated for Golden Globe Awards. Disney has taken a big interest, launching Disney+ in November 2019 with its immensely popular series, The Mandalorian, in addition to purchasing Comcast’s stake in Hulu in May 2019, taking full control of the streaming service.

 

Streaming services acknowledge the growing competition in the industry, but no longer see cable television or linear TV, as major threats. In a 2019 letter to shareholders, Netflix stated that in the long term the biggest impact of new competition entering the streaming business will be to the linear TV format offered by cable. “In our view,” Netflix stated, “the likely outcome from the launch of these new services will be to accelerate the shift from linear TV to on demand consumption of entertainment.”

 

When it comes to canceling cable, NTIA found that 27 percent of households surveyed in 2017 did not have cable subscriptions, more than half are “cord-nevers” who never had a cable or satellite TV subscription. But OTT’s success isn’t just coming from cord-cutters or cord-nevers — a majority of cable subscribers also subscribed to a streaming service.

 

It appears the tipping point for a mass migration away from traditional cable could be near, if not already tipping in the favor of streaming services.

 

The big question is no longer, “how many homes have cut the cable?” More accurate questions are “how many households only subscribe to streaming services?” and “how many services are they subscribed to?”

 

— Jay R. Shedd is senior director of Sales, Marketing and Customer Service at IT&E, the largest wireless service and sales provider in Guam and the Marianas. He has more than 30 years of experience in the telecommunications industry.

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