October 17, 2014
Just one day after HBO announced its plans to launch a standalone Internet streaming service in 2015, CBS followed with news of its own subscription streaming service that will provide consumers with access to live programming in addition to thousands of current and past programs on demand. The announcements could be good news for cord-cutters who are increasingly turning to the Internet for content. The news may also have an eventual impact on how TV is offered by cable, satellite and telecoms.
“The moves signal a watershed moment for Web-delivered television, where viewers have more options to pay only for the networks or programs they want to watch — and to decide how, when and where to watch them,” reports The New York Times. “Rapidly fading are the days in which people pay an average of $90 a month for a bundle of networks from a traditional provider.”
Media companies are reacting to the major success of Netflix, the growth of competing streaming services such as Amazon and Hulu, and the increasing number of viewers who opt for on-demand programming via smart TVs and devices including Roku, Chromecast and Apple TV.
Netflix CEO Reed Hastings has long contended that the Internet was replacing traditional TV and that apps were replacing channels. “We are Internet disrupters, through and through,” he said. “We are continuing to push that edge.”
“The push into Web-only offerings by HBO and CBS, two networks that earn billions of dollars in profits from the traditional system, highlights how rapidly the balance of power is shifting in the television landscape,” suggest NYT. “The CBS All Access service, at $6 a month, made its debut on Thursday; details about HBO’s service, which is set to start in 2015, are still hazy.”
“Everybody is talking about it,” said Les Moonves, CBS chief exec. “It is an important part of our future. Our job is to do the best content we can and let people enjoy it in whatever way they want. The world is heading in that direction.”
The shift may be moving us closer to a la carte television. However, sports remains one major component keeping traditional bundles alive (the new CBS offering does not include NFL games). While some streaming options for sports are emerging, many viewers continue to pay for satellite and cable specifically to access live sports.
“The networks that offer new streaming services must perform a delicate balancing act so as not to cannibalize the billions of dollars that cable and satellite operators pay them to distribute their programming,” according to NYT. “CBS and HBO were careful to say that they would work with both current and new business partners and that their new initiatives would not cut into their existing business.”
While on the surface the moves may seem like exciting news for cord-cutters and cord-nevers, it remains to be seen whether cutting out the middlemen (cable and satellite companies) will actually be cheaper for consumers.
“Cord-cutters should be careful what they wish for,” notes The Wall Street Journal. “A future where television viewers subscribe to each channel individually could be cheaper for young people who only watch two or three channels, industry executives said. But analysts say that for households filled with people of differing tastes or fans of many channels, this future could make the average cable TV bill — which hovers at around $90 — seem like a bargain.”
Some analysts predict that unbundling would drain half of the revenue from the television industry and, as a result, dramatically shrink today’s hundreds of channels. In that forecast, consumers would no longer be sharing the cost of running channels with advertisers. And sports networks could be at particular risk.
Regardless, we should expect to see additional streaming offerings in the near future. As previously reported, Sony is prepping an Internet service likely to include programming from Viacom, DirecTV said it is also planning an online video service, Spanish-language broadcaster Univision is closer to making its UVideos app available to non-cable subscribers, and we may see a service similar to HBO’s product from premium cable network Showtime.