The world of TV is reeling from the pace of innovation. But not everyone is ready to declare defeat: CBS declared that TV viewing continues to rise, and Richard Freudenstein, CEO of Foxtel confidently noted that the Netflix threat is over-hyped. His words may very well be prophetic, in fact: “Broadcast TV will continue,” he insisted, “[though] there will be continual fragmentation.” Pointing to stabilizing – if not plain improving – subscription and churn numbers, Mr. Freudenstein made a data-driven argument that the death of cable TV has been exaggerated.
In the last couple of weeks, Conviva released two new reports that shed some light here: our Viewer Experience Report Update highlighted the growth in online video quality, while demonstrating that rapid consumer adoption is putting great strain on overall infrastructure. And our Don’t Break The Spell survey of UK consumers demonstrated that viewers really do expect a TV-quality experience – and, mobile growth notwithstanding, really do want to sit back and enjoy watching on a larger screen.
But does any of the data there actually give us a hint as to the future of TV? In some sense, yes: viewers increasingly want to adopt the SVOD usage model of choosing what they want to watch and when – but demand the same sort of quality experience they became accustomed to while consuming 24/7 linear channels delivered over MSO networks. And they’re willing to spend the money on subscriptions to get this sort of convenience and choice. So maybe we can all agree that the issue is not who delivers the content or how – it’s meeting the usage pattern demands, with a level of experience that rivals or exceeds on-network services. No small order.
The speed at which providers are able to meet this requirement remains to be seen, but certainly AT&T is not letting the grass grow beneath its feet. The ink barely dry on its final acquisition paperwork of DirecTV, the company announced an OTT version of NFL Sunday Ticket, perhaps DirecTV’s greatest content asset. And one has to wonder if the increase in data allotments for wireless subscribers doesn’t owe as much to the company’s desire to see video usage migrate to the portable device as it does to thumbing the corporate nose in the general direction of T-Mobile.
Will it be enough? For an industry losing subscribers by six figures per quarter, Pay TV is in a scary situation – even if the current attrition rate suggests the industry has plenty of time to get it right before Armageddon need be declared. Nonetheless, providers are assiduously getting into the off-network game: ITV invested into MCN, Sky Sports teamed up with The Sun to provide sports clip; and perhaps most loudly, NBCU invested heavily into Vox and Buzzfeed. Regardless of each company’s true strategic stance around OTT, they are changing the economics of the pure play at a fundamental level with their investments. And when the venerable BBC declares that one of its channels, BBC Three, will be going all online shortly, you know that change is afoot.
Finally, would any review of the week be complete without noting HBO’s acquisition of the rights to Sesame Street? Love the deal or hate it, nobody can deny the classic kids show is now here to stay. And now that they can access the whole catalog through HBO Go or HBO Now, perhaps we can finally get them hooked on something a bit more wholesome than the preparatory gyrations of tomorrow’s tween starlets.
As the Millennials drive us ever quicker to OTT, with their 3-to-1 preference for OTT over traditional TV, the pace seems sure to pick up. And as digital starts to eat traditional TV’s lunch in the ad market – the political spike in 2016 will be the canary in that mine – acceleration will increase. The prediction from the CBS report mentioned at the top of this blog seems to us to have one particular area of real merit: they predict that by the end of the decade, only 50% of TV consumption will be traditional linear channels. That’s as good a yardstick as we’ve seen .