The End of Cable TV
Cable TV operators know their future lies in providing the internet pipe and all the benefits it will gain as 5G becomes the norm. Consumers have been cable-cutting for some time as they move to the internet for all of their in-house and mobile entertainment viewing (some 6.2 million are expected to cable-cut in 2020).
This year is pivotal, as subscription service providers (Netflix, Disney, Hulu, CBS, Amazon, and all the others) will need to outlay billions on new content, placing a great strain profits. This will necessitate that advertising be introduced to streaming content to support static subscription fees.
Additionally, cable TV operators have begun to embrace streaming on their own by aggregating content. Comcast, for example, added Netflix and Hulu, to its 'XI' pay TV platform and recently launched FLEX, a free service for broadband only subscribers. that bundles free streaming apps with high-speed internet access.
Pressure to control costs is driving two significant trends: globalization of content and advertising becoming a permanent part of the streaming content viewing experience.
Adding Ads to Streamed Content
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| The subscription service universe is becoming very crowded. |
TV remains the most efficient and best way to get a message out quickly to large audiences. However, TV ad load is declining as advertising moves to social media and streamers - which is expected to reach $25 billion by 2024 with $17 billion of that going to subscription based platforms.
Consumers clearly like the choices offered by the streaming world but surveys have shown that 42% of those 18-49 are finding that managing the complexity of all their online subscriptions presents a problem and they are not willing to spend huge sums on these services. Therefore, streamers are experiencing consumer resistance to higher monthly fees and the continued addition of more channels by users.
Content streamers came to market with very aggressive pricing and now are coming to terms with the economic realities of producing content and turning a profit. Pressure to control costs is driving two significant trends: globalization of content and advertising becoming a permanent part of the streaming content viewing experience.
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Movie Theaters: The Winners
Let's recap.
- The content streaming industry is getting very crowded.
- There will be a lot of inferior content produced as the cost of quality content rises.
- Streaming subscription fees cannot be raised to cover increasing costs of production
- Consumers are saying they are limiting their subscriptions to $44 per month at 3.6 services.
- Subscription based channels will need to raise revenue through advertising and product placement.
- The broadband service providers have already begun to offer aggregated content packages to offset
the impact of cable-cutting.
Given all of the above, it is not a stretch to infer that movie theaters will continue to be the venue in which to view the very best, highest quality content in the very best way. And, it is not unwise to believe that the studios see movies as their best way to distinguish themselves as the providers of top quality content.
The cinema will survive the current battle against the streamers and may, quite likely, come out on top as the best place to experience top quality, ad-free content (sans pre-feature ads).
Jim Lavorato, Founder
Entertainment Equipment and 4M Performance
