Keeping An Eye On TV
TV is clearly in a flux at the moment. Pay TV subscriptions officially decreased in 2013, no-one watches live TV anymore and the next generation of young adults are growing up apparently more content with watching TV on a tablet rather than on an actual TV screen. Everyone wants content now and on their own time and many wish to pay a cheaper price for it, but this appears to be an issue that mainly non-traditional industry players are willing to confront.
If you look at the names of companies linked over the past year with creating new ways of watching TV - Intel, Sony, Dish, WWE, Netflix, Microsoft, Apple - only one of these is an existing MSO. Sure, MSOs are creating TV Everywhere apps so that subscribers can watch TV on other devices within their homes, but for the most part, this is the extent of their embrace of new technology.
Out of home viewing remains extremely difficult if not impossible for live TV, authentication of network and MSO apps is often a pain and MSOs, platforms and TV networks still do not have universal agreements for the viewing of their apps. Have Time Warner Cable and want to watch Showtime on a TV set that doesn't have a cable box? You need a Roku or an LG TV. Want to watch NBC Sports Extra or Fox Sports on your tablet but don't have one of the handful of providers covered? Too bad. You pay the same subscription as other providers who are covered, but you can't watch. The landscape remains convoluted and complicated for next generation solutions.
On top of this is the fact that around 1 in 10 TV viewers no longer have a subscription to pay TV, with a further quarter of viewers having recently downgraded their cable or satellite subscription. Overall this accounts for a third of TV viewers who are either at risk of cancelling their pay TV or already have done so, but again, only one traditional provider so far has come out with a plan to target these individuals.
But what is the future? Several companies have thrown their hats into the ring for alternative viewing methods. The most common of these appears to be an online delivery of existing cable networks, limited in scope versus regular cable, but cheaper. Almost half of Cord Cutters and Nevers expressed interest in subscribing to such a service in a recent Ipsos MediaCT poll, with 1 in 5 existing subscribers saying that they would switch to an online service.
Another product soon to come is the cloud DVR, effectively aping the service that Hulu Plus currently offers on a limited scale. Although technically this already exists to TiVo subscribers with a Roamio box, that service is hamstrung by restrictions from cable networks. Interest in future technology like this is already high, with 1 in 3 TV viewers expressing interest in adding such a service to their current subscription. There would also be a high potential to switch providers who offer this service, with over 2 in 5 of those interested saying they would change to a provider who did offer cloud DVR if their current one did not.
It is difficult to understand the sluggishness of existing providers in moving toward services that could entice current Cord Cutters and Nevers to pay a subscription again, or prevent churn from the at-risk Cord Shavers in leaving the arms of the provider entirely. Instead, it appears that the innovation being driven by non-traditional entrants to the provider landscape may scrape away consumers who wish to watch TV, but pay a lower cost for it.
In the era of big data, it also appears to be an oversight for MSOs to not want to enter the online TV market. Anyone who offers such a service will be able to tag what viewers are watching live - essentially your very own set-top box data. As well as possibly helping to set targeted local ad-sales rates, this would also aid providers in their constant fights and arguments with networks over re-trans fees.
It may be that a fear of cannibalizing existing pay TV subscribers that is holding back many of the traditional service providers. But by not entering the innovations market and allowing others to establish themselves, cable and satellite operators are essentially offering up lapsed and at risk customers to new entrants when these would be easy to maintain or bring back into the fold.
Add in the additional marketing information that online viewing and cloud DVRs would offer any individual, and the lack of activity appears even more strange. Alternative viewing methods that may generate lower revenue than the `premium' experience is a short-term strategy that may not look attractive on paper, but keeping or even growing your subscribers and preventing rivals from entering the market should appear even more pleasing to the eye and is a mid-to-long term strategy that should encourage success.
