The news for the left-wing affirmative action program that is bundled television (cable and satellite) just got worse. According to Nielsen, live viewership of television is dropping while subscribers to streaming television continues to explode. Moreover, cable providers appear ready to dump low-rated networks like MTV.
At a conference this week, CBS President Les Moonves summed it all up perfectly: “The days of the 500-channel universe are over.” He then reiterated that Showtime will soon be available as a streaming channel, and available for the first time independent of a bundled television package.
The nightmare the left-wing conglomerates, who profit from the racket known as bundled television, most feared has come true. Customer behavior is changing. Changing behavior is key to disrupting the status quo. The status quo in this case is forcing people to spend $150 a month that goes to directly to cable networks they do not watch: MSNBC, CNN, MTV, etc.
You want Fox News and AMC? No problem, sucker, but in order to get them you’re going to have to subsidize the million dollar contracts of Chris Cuomo, Al Sharpton, and a bunch of other liars who hate you.
Netflix and other streaming services have officially disrupted this immoral cash cow. For less than $10 a month, Americans began to discover a ton of streaming programming available to them at their viewing convenience.
The question then became, “Why am I paying $150 a month for a bundled package I hardly watch?”
The answer was, “Sports, news, and HBO.”
Bargain streaming packages now offer sports and news. The April launch of HBONOW, a $14.99 per month streaming channel, that for the first time in decades makes HBO available outside of a television bundle, is being defined as a watershed in the ongoing collapse of bundled cable and satellite:
It’s happening before our eyes. The cable business as we know it is in retreat and an a la carte world, streamed over-the-top, is dawning.
The announcement by HBO on Monday that it will start streaming a standalone service on Apple’s iTunes in April is a watershed moment for premium content companies. For $14.99 people who don’t have cable or satellite service will still be able to get HBO programs.
It’s hard to believe that other premium cable networks will not follow, and Les Moonves reminded the world on Wednesday that Showtime is indeed on the path to an over the top option.
The cable companies had better get used to it, Time Warner CEO Jeff Bewkes essentially told an investor conference on Tuesday.
With the writing on the wall, cable channels like HBO, CNN, ESPN, and others, are offering themselves to customers via streaming, a la carte, and at a greatly reduced price.
They don’t want to do this. Doing this will only hasten the end of bundled television — which makes all of these moves a delicious vicious circle that ends with the consumer on the winning end and greedy Hollywood on the losing end.
The problem is that content providers have no choice. They have to go where the eyeballs are, and the eyeballs are fleeing bundled television towards the bargain and convenience of streaming:
Adults watched an average of four hours and 51 minutes of live TV each day in the fourth quarter of 2014, down 13 minutes from the same quarter of 2013, according to Nielsen’s fourth-quarter 2014 Total Audience Report. Viewing was down six minutes between the fourth quarter of 2013 and 2012. And between 2012 and 2011, viewing time actually increased for live TV.
At the same time, more homes turned to online video, with 40 percent of U.S. homes subscribing to a streaming service such as Netflix, Amazon Instant Video or Hulu compared with 36 percent in the fourth quarter of 2013, according to Nielsen. Netflix is by far the most popular streaming service, in 36 percent of all U.S. homes, and Amazon Instant Video is in 13 percent of homes.
The trends have rattled the entertainment industry, with broadcast and cable networks scrambling to take on new competitors on the Web.
On the flip-side, tired of having low-rated networks forced on them (which increases the cost of everyone’s cable bill — the very thing making cable customer’s flee), cable companies are pushing back hard against content providers like Viacom who are trying to force even higher prices on them for networks no one watches:
The lobbyist represented Viacom, the media conglomerate that is the parent of two dozen networks including MTV, Comedy Central and Nickelodeon. The local cable television provider, Suddenlink Communications, had dropped Viacom’s channels from its lineup in October after the two companies had failed to reach an agreement. Viacom wanted Suddenlink to pay significant increases; Suddenlink refused, citing deteriorating ratings at the networks. …
Television groups have demanded significant rate increases from cable and satellite distributors in recent years. With their advertising businesses under pressure and the market for selling programs to streaming services more competitive, raising the so-called carriage fees they charge distributors is increasingly important to driving profits.
But cable providers, especially the smaller ones, are making a calculated bet, and some are refusing to pay up. Their profits increasingly are tied to selling broadband Internet service rather than video, and they are watching to see how many customers they will lose if they don’t offer the traditional bundle of cable networks. Unlike the video business, where customers can switch to satellite and other offerings, cable companies can have an advantage in the broadband arena, because there is less competition for selling Internet service in the markets where they operate, analysts said.
And there you have the death spiral.
- With streaming as an option, customers cancel or watch less cable.
- To make up for lost carriage rates (the money each network is paid by the cable company per customer forced into a bundle with that network) and lower advertising rates caused by fewer viewers, content providers increase the price of their content to cable companies.
- This increased content cost is passed on by the cable company to the cable customer.
- The price increase convinces more customers to cancel their cable and move to streaming.
- To make up for that lost money, content providers pick up extra money by offering their content via streaming.
- The more content available on streaming, the more enticing streaming is to cable customers, and the more people cancel their cable.
This slow-motion revolution is gaining speed.
Follow John Nolte on Twitter @NolteNC