With CBS, HBO and ESPN rolling out separate SVOD services, many suspect that traditional cable programming is dying — to be replaced by a la carte options where people can choose which subscription services they would like. It’s true — pay TV subscriptions are on the decline and cable companies now have more broadband subscriptions than cable subscriptions. But, in reality, we’re seeing a lot of unique offerings and alliances forming within this changing media economy.
Recently, Verizon and Cablevision have announced new offers that show the bundle isn’t dead just yet. Cablevision will be offering HBO Now to its broadband providers, with no TV subscription service needed. Similarly, Verizon started offering Netflix with its service last year in some test markets.
It’s smart business for broadband companies to offer content add-ons that flow over their pipes. Internet/Cable providers have realized they can get a cut of the subscription profits if they bundle those OTT services along with their Internet subscriptions. It’s mutually beneficial as cable companies add content offerings to their bundles, while content providers penetrate new households. Now that Internet service providers cannot sell “Paid Prioritization,” this is another way they can monetize these relationships.
Cablevision is the first operator to offer HBO NOW, HBO’s new standalone over the top service. The move will allow Cablevision broadband customers to access the HBO programming service without needing to buy a HBO cable package. Cablevision COO Kristin Dolan said, “As New York’s premier connectivity company, we are enabling Optimum Online customers to enjoy content in any way they choose to receive it,”
Verizon is offering a year of Netflix as part of its “triple play” package for Internet, television and phone. The deal is limited to New York residents and is just a test run, available for only 11 days. This marks the beginning of a unique relationship between two companies that have been at odds with each other. Last year, Netflix had blamed Verizon for throttling bandwidth and causing bottlenecks in their traffic. Although, now that the FCC has ruled in favor of the most-strict Net Neutrality rules, Netflix can rest easier knowing that all traffic on the Internet will be treated equally and internet providers cannot block or hamper users’ access to their content.
Verizon as a cable company competes with Netflix, but Verizon as a broadband company has business interests in common — meaning both groups can contribute to helping each other reach new users. This deal, along with Netflix’s international expansion, will certainly help the company find new subscribers as Netflix hopes to reach 100mm worldwide subscribers by 2017.
This is the first time a major U.S. cable provider has offered a subscription to Netflix as part of its packages. However, we are already seeing similar deals in Europe, in which providers buy Netflix subscriptions that are then given to new customers.
Much like the mini-bundles popping up from Dish’s Sling TV and Sony’s Playstation Vue, broadband companies are meeting consumer’s high demands for over-the-top content. We’re interested to see how these new bundling agreements develop and if any additional companies and content will come into play.