As preciously corrupt and profitable as bundled cable and satellite is, ignoring the future, which is all about streaming video on demand (SVOD) is not the answer, and the Big Boys know it. Financial analysts see a “structural TV decline” and as a result are downgrading stocks to the most vulnerable cable television content providers. Meanwhile, Sony is prepping the launch of a Web TV service that will include 75 networks.
The recent crash in cable viewing ratings is the camel nose in the tent. People are watching less cable television, advertising revenue is plummeting, and by extension cable customers are learning they can live without the over-priced behemoth. Next comes the cancellations as some of those customers move to SVOD, which is ridiculously cheaper. This glaring writing on the wall has forced a downgrade of the stocks of Discovery Communications and others:
Sanford C. Bernstein analyst Todd Juenger on Wednesday downgraded his rating on the stocks of Viacom and Discovery Communications and cut his price target on CBS Corp. and Scripps Networks Interactive.
“Four months of unprecedented TV audience declines, coupled with evidence of growth of SVOD consumption, is enough for us to conclude that something has systemically changed,” he wrote in a report. “We believe ad-supported TV is in the early stages of a structural decline.”
Juenger also sees what I see, a Death Spiral:
“The content companies, however, are in denial – selling more content to SVOD to offset ad revenue shortfalls, which accelerates the problem. We expect increased content investment, against a declining domestic end market, will reduce return on investment and margins over time.”
In other words, to make up for what they are losing to SVOD, these networks are getting in bed with SVOD, which in turn makes SVOD even more attractive to customers and almost certainly hastens the death of bundled cable.
Though they haven’t yet released the only fact that matters — The Price — Sony has partnered with a bunch of content providers to “reinvent” television with a streaming, cloud based television service that will include 75 networks:
The service will be called PlayStation Vue and be accessible via PlayStation gaming consoles. After an invitation-only beta launch starting this month in New York, Los Angeles, Chicago and Philadelphia, the company plans a broader commercial launch early next year.
The Sony Network Entertainment International-operated service will compete with traditional cable and satellite TV services and offer live TV and on-demand content. The service will launch with 75 networks under deals with the likes of Viacom and CBS Corp., which have announced their participation, Fox, NBCUniversal and Discovery Communications. …
Viewers can save favorite shows to the cloud “without storage restrictions or scheduling conflicts,” Sony said about the functionality of the service. “Once viewers tag a favorite show, they will automatically have access to episodes of that show for 28 days so that they can watch on their own time.”
If this is $19.99 per month, great. If it’s higher than what we have here is the Bundled Cable Villains attempting to recreate their villainy online: bundling networks under the guise of SVOD; forcing people to pay for networks they never watch in order to have access to the ones they do.
That scheme of course is the only hope these networks and the left-wing multi-nationals who own them have: that tens of millions of Americans will simply continue to agree to pay for networks they never watch in the new streaming format.
If that happens, it would be the greatest trick the Devil has ever played. Through bundled cable, dozens of low-rated left-wing channels like MTV, CNN, and MSNBC thrive — not based on viewers but on the number of households they are available in. If your cable package includes CNN and the rest, whether you watch or not, they are making money off of you.
CNN and its left-wing ilk can’t survive on ratings alone. These cultural sewage spewers need the bundled cable racket to stay alive and relevant. If that racket can successfully transfer over to streaming, that would be a real shame, and the model would quickly move into providers beyond Playstation.
Things will still be better and cheaper. You are eliminating the middle man of cable television providers and all the costs involving maintenance and equipment. Competition will also be stronger because anyone can launch anything online. Cable companies usually enjoyed a content-delivering monopoly.
But when you have a handful of multinationals who own almost everything related to entertainment, they are almost certain to get together and recreate the boiling frog experiment that got people slowly used to the idea of paying $100 a month for dozens of channels they never watch.
John Nolte on Twitter @NolteNC