Panic: Networks to Combat ‘Cord-Cutting’ by Upping On-Demand Service

AP Photo/Matt Rourke
AP Photo/Matt Rourke

Television networks will offer increased on-demand access to their programs in an effort to combat “cord-cutting,” which is slowly but steadily eroding cable and satellite companies’ long-protected revenue models.

Reuters reports:

U.S. pay TV customers will have more chances this fall to catch up on shows in mid-season as networks increase video-on-demand offerings in their battle to keep audiences from jumping to streaming services.

The shift is part of the jockeying among television networks, cable and satellite providers, and online subscription services like Netflix Inc (NFLX.O) to attract viewers and maximize profits in an industry undergoing rapid change.

Networks want consumers to stick with the cable and satellite services that provide their biggest revenue source. Cable channels, for example, will receive $52.7 billion in fees from pay TV operators this year, just more than half of total revenue, according to data from SNL Kagan.

To feed consumers’ desire for the binge viewing made popular with streaming services, the networks are promising a significant increase in on-demand access to episodes of current seasons through set-top boxes, websites and mobile apps.

The move comes as the cable TV business continues to die a slow but inevitable death.

Cable and satellite providers lost more than 750,000 subscribers in just the second quarter of this year, and nearly 1.3 million subscribers overall over the past 12 months, according to Variety.

That’s up from the 566,000 subscribers that cut their cable packages in the second quarter of last year.

It’s clear the big guys are panicking as the rise in streaming services like Netflix and Amazon Prime has completely upended the pay-TV business. For all of these giant telecom companies, cable bundling helps them subsidize their less profitable (read: more ideological) ventures, including leftist news outlets like CNN and MSNBC. Simply put, no one would watch these channels if consumers weren’t forced to support them through these bundles.

But now that Americans realize it’s way more cost-efficient to drop $20 a month or so on a few different streaming services than it is to shell out $100 for a fancy cable package, the telecom companies are terrified. And they should be.


Follow Daniel Nussbaum on Twitter: @dznussbaum


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