Back in the early days of cable, Americans bought cable to get HBO movies and boxing events. A little known service out of Bristol, Connecticut, ESPN aired Aussie Rules Football and the Canadian Football League. It wasn't until ABC TV acquired ESPN ABC that ESPN began to dominate cable TV with must-have sports content.
Yet, the ball game is much different today. Big-time content providers like ESPN are losing revenue. Breitbart News reports that in October 2017 alone, 480,000 cable/satellite subscribers ditched programming packages that bundled ESPN.
Only three days ago, the San Jose Mercury News reported that Comcast, the largest cable TV firm, reported a quarterly loss of 125,000 cable subscribers atop a loss in the previous quarter of 34,000. The SJMN reports that Netflix added 850,000 subscribers in the U.S. between July and September, giving it 52.8 million such subscribers. That means Netflix added 1.95 million subscribers in the USA since June!
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| NETFLIX Netflix Adds 5.3 Million Subscribers in Q3 2017 (Statista) |
Today, Americans and much of developed world can get OTT as subscription video on demand (SVOD), e.g., Netflix, Amazon and Hulu, as advertising-supported video on demand (AVOD), e.g., Crackle, and one-off transactional video on demand (TVOD), e.g., iTunes, Vimeo On Demand and Amazon Instant Video. Some provides operate in a hybrid SVOD/AVOD mode, e.g., Hulu, CrunchyRoll.
There are even hardware makers such as Roku that make so-called streaming sticks, which make it easy for Americans to access various OTT offerings through one interface.
Americans have been dumb to pay for TV commercials since the 1980s through today. Paying for the privilege to watch commercials is stupid. Americans are awakening to this truth.
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| The Steady Rise of Roku (Statista) |
So what is the fix for the fast-sinking Cable/Satellite TV / TV networks industry? Rather than charging viewers to watch otherwise free TV and to watch commercials, Cable / Satellite execs need to give away their products. That means satellite dish service and cable service needs to become free to the viewers.
Instead, Cable / Satellite execs need to charge the TV networks / content providers for access to those eyeballs. In turn, TV networks that provide content need to develop their own ad sales forces and sell advertising.
Americans who were raised on traditional TV, the so-called baby boomers, are rapidly aging as well as dying off. Those replacing them, Millennials, have grown up knowing how to get streaming content from the Internet.
Years ago, all TV was free. TV networks earned revenues by selling ads. That model needs to return. It will eventually in spite of any execs fighting against it.
K-Mart and Sears died off because execs could not let go of investments in inefficient capital. Cable / Satellite execs seem to be making the same mistakes with their offerings of so-called skinny bundles like DirecTV Now (AT&T) and Sling TV (Dish Network), Xfinity Instant TV (Comcast).
As well, Cable / Satellite execs with their skinny bundles also face competitors Google and Sony with their respective skinny bundles, YouTube TV and PlayStation Vue.
Execs at Verizon were smart to sell off their FiOS high-speed Internet / TV service to Frontier. Verizon execs dealt away millions of customers and cash flow from California, Texas and Florida. Why? Verizon execs plan to offer super-fast wireless service that should provide Internet speeds at a gigabit per second or faster.
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| Amazon Nearly Doubles U.S. Prime Members in Two Years (Statista) |
The future still will be a mad scramble for the minds of would-be customers. While would-be customers were dumb enough to pay for advertising between the 1980s and 2000s, the younger generations of ad blockers are far less inclined to do so. At day's end, OTT subscription TV is merely another kind of ad blocking, ad blocking that actual customers have willingness to buy.
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