Ending a Relationship

It had been a long time coming.

Cable TV had been a big part of our lives for decades, a constant entertainment companion, but being together so much during the pandemic took a toll on the relationship. Suddenly, those ever-expanding commercial breaks seemed endless after watching ad-free streaming services such as Netflix, Disney+ and Amazon Prime. Even Hulu, which we watched with ads, served up a more palatable break — and conveniently offered a little countdown to tell us when it would be over.

We picked up YouTube TV for live programming, and that was it. The cable relationship was over. We cut the cord.

Apparently, we are not alone. A Roku survey found one in three U.S. households are cord cutters, and many have decided to make the change in recent months, citing the pandemic, the abundance of free AVOD services, and lack of live sports, among other factors.

Aside from the learning curve on how to work the remote to get to the channel or program I want, it’s been a smooth divorce. Kicking cable out also gave us more space. We gained some shelves by ditching the boxes.

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So far, I don’t miss the old companion. I haven’t found a program or channel that I previously had on cable that I can’t find or approximate on our new streaming combo. Sure, I don’t have the convenient clock on the box to see the time. It takes a little more effort to figure out what I want to watch among all the new choices, but, honestly, I don’t miss cable.

It was the growing relationship with our SVOD services, the new-and-improved version of live TV on YouTube TV and the cable bill’s increasing drain on our finances that drew us away.

When we announced the decision to end it, my daughters looked up from their phones and sarcastically said, “Oh, no! We watch so much cable.”

Goodbye old friend.

COVID-19 a Push to Cut the Cord

During the pandemic, consumers are sitting at home looking for more visual entertainment than ever before — and evaluating their options. Happily, the disc has gotten a lift as consumers realize the value of the stalwart format, while digital transactional retailers have gained in part by offering premium VOD titles that bypassed or left theaters early.

But, in addition to theaters, one entertainment option that may suffer from COVID-19 is traditional cable, satellite or telco pay-TV. A study from TDG Research found that as virtual MVPD services re-create the offerings of traditional pay-TV, consumers are increasingly seeing less of a need for it. “Most OTT pay-TV services now provide a full complement of both broadcast and cable channels” said analyst Michael Greeson.

Indeed, I am finding it increasingly annoying to sit through commercials on cable that last longer than ads on any AVOD offering and don’t include that convenient countdown to tell you when the torture will end. After scrolling through the numerous cable channels and finding absolutely nothing I want to watch, I am jumping to smart-TV options more and more. The family wants to cut the cord, and the time may be right.

As TDG noted, vMVPD leaders Hulu Live TV and YouTube TV offer the four major broadcast networks, channels that previously helped tie consumers to traditional pay-TV.

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It’s ultimately a flight to quality and value, the same things that have bolstered the transactional home entertainment business since its beginning.

Cable TV Could Lose $1 Billion in Hidden Fees Revenue

Hidden fees on the typical pay-TV bill are the secret sauce that pad cable operators’ bottom line and state and local government coffers.

The average cable bill includes $37.11 worth of added monthly fees (excluding $13.28 in taxes) that aren’t part of the advertised package price, according to new data from KilltheCableBill.com. A separate report from Decision Data found the average domestic cable bill is about $217 monthly.

With nearly 600,000 video subs canceling service in the first quarter (ended March 31), the report contends pay-TV operators lost more than $22 million in revenue per month, which could result in $265 million for the year if cord-cutting trends continue. That revenue loss could skyrocket to $1.5 billion if video sub losses balloon.

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At the same time, the surge in over-the-top video platforms charging flat monthly fees of $15 or less continues. Netflix alone added more than 15 million subscribers in the quarter.

“The fact is that Q1 was devastating to cable companies, and I think that we’ll see when Q2 stats come out and a full quarter of quarantine has finished that the [coronavirus] pandemic just might be the final straw for cable TV as we know it,” analyst William Parker wrote in the report.

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Sling TV Turning 5 Years Old

It was five years ago at CES that Dish Network announced it would soon launch an upstart $20 monthly online TV service called Sling TV. Today, the service, which launched in February 2015, costs $25 to $30 and touts an industry-leading subscriber base of 2.69 million.

A combo package costs $40, with add-on programming available at $5 to $10 extra per month.

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Sling TV was the first service to offer standalone ad-supported access to ESPN, which at that time was one of the pillars of the traditional pay-TV bundle. Dish had acquired the groundbreaking online rights following a protracted carriage dispute with Disney.

The move heralded the launches of Sony’s PlayStation Vue, HBO Now, Spectrum TV Plus, DirecTV Now (AT&T TV Now), Hulu with Live TV, YouTube TV, Philo TV,  and fuboTV, among others.

Consumer Reports recently touted Sling TV among the best standalone streaming services for cord cutters. Sling also launched apps for LG and Samsung TVs, as well as Xbox game systems. “With Dish’s Sling TV, you don’t get individual shows; you get channels,” wrote the publication.

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TechRadar called Sling TV a “cure-all” for the cord-cutting generation, “something that we knew we needed but no company stepped up to make.”

The website lauded Sling TV for its affordability and monthly access.

“Best of all, you won’t have to give up some of the perks cable provided in the last few years like the ability to pause live TV or watch something that aired up to 72 hours ago,” wrote the site.

 

U.S. Broadband Households Who Watch Mobile Video More Likely to Cut Cord

U.S. broadband households highly likely to cut the cord in the next 12 months watch more than six hours of video content on their mobile phone a week, compared to 2.5 hours among all U.S. broadband households, according to research from Parks Associates.

The report Examining Broadband Cord Cutters notes that fixed broadband providers that do not offer mobile services are particularly susceptible to cord-cutting among their current subscribers. These market trends drove U.S. cable operators Comcast and Charter to introduce mobile services as a way to extend their service-based product portfolios, according to the report.

“Roughly 10% of broadband subscribers are likely broadband cord-cutters, with half of them highly likely to make the change in the next 12 months,” said Brett Sappington, senior research director and principal analyst, Parks Associates, in a statement. “Many are satisfied with their current provider overall, but these subscribers are aware of the other options available to them and could become actual cord-cutters if their current service does not continually meet their needs.”

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The research notes that two-thirds of broadband households currently subscribe to a cable internet service, three in ten subscribe to DSL or fiber optic, and one-third use mobile data services. Verizon, AT&T, and Frontier are the largest providers of DSL and fiber-based fixed-line services.

“Potential broadband cord-cutters rely on their mobile devices for entertainment,” Sappington said in a statement. “They are significantly more likely to watch live video content via mobile, including live TV broadcasts and livestreaming, averaging an hour more per week each compared to average broadband households. As 5G mobile and 10G fixed broadband services start to deploy, the substantial performance improvements will be attractive to this segment of subscribers, which will drive many providers to match these offerings in order to achieve parity in competition and messaging.”

Sling TV Launches Puppet ‘Slingy’ to Promote Service

OTT service Sling TV is introducing “Slingy,” a puppet star of its new digital ads.

The puppet is designed and created by Tim Clarke, one of the masterminds behind “The Muppets” puppet design, according to the service’s blog.

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“Slingy is on a mission to let everyone know that Slinging is easy and anyone can do it — even a puppet!” reads the blog. “Slingy is passionate about educating live TV lovers who want to cut the cord and is even willing to show up at people’s homes and offices to tell them about Sling. After a visit from Slingy, consumers can’t help but get excited about the choice, flexibility and control that Sling TV offers without the baggage that comes with cable.”

Last year, Sling TV launched a tongue-in-cheek TV campaign featuring celebrity couple Nick Offerman and Megan Mullally as “slingers.”

Research: U.S. Broadband-Only Households to Grow to 40.8 Million by 2023

Broadband-only U.S. households are set to grow from 23.3 million in 2018 to 40.8 million by 2023, according to estimates from Kagan, a media research group within S&P Global Market Intelligence.

“The steep upward trend of due to ‘cord-cutting’ is not surprising given the abundance of online video services on the market, although this could be a circular argument, with more companies jumping on the streaming video bandwagon in response to the growing broadband-only market,” said Tony Lenoir, senior Kagan research analyst at S&P Global Market Intelligence, in a statement.

Kagan expects the segment of broadband homes without a traditional multichannel subscription to account for nearly one-third of U.S. households in the next five years.

Kagan findings show that over-the-top (OTT) products, whether subscription video on demand, direct-to-consumer or virtual multichannel, are offered at competitive prices which is a major factor fueling cord-cutting. Other reasons for the strong projection of broadband-only growth include the ease of joining and cancelling online streaming services, Kagan found. They typically do not require contracts.

“The value proposition of streaming video services touches a chord with the average consumer,” Lenoir said in a statement. “The vast majority of streaming services offer free trial periods, effectively allowing consumers to shop around while bypassing hardware hassles associated with legacy video distribution. This coupled with the fact that streaming services are typically screen-agnostic and seamlessly portable, offer individual, customized consumption for customers.”

Additional findings include:

  • Kagan expects broadband-only homes, or households without a traditional multichannel video package, but a subscription to wireline broadband, to rise at an 11.9% compound annual growth rate from 2018 to 2023.
  • Broadband-only homes are set to account for 41.7% of wireline broadband households by 2023. Kagan expects cable and telco broadband to serve nearly 75% of U.S. households by that time.

Record Dow Jones Market Surge Results in Big Gains for Entertainment Tech

The Dow Jones Industrial Average closed Dec. 26 up a record 1,086 points following the Christmas Eve (Dec. 24) market meltdown, which saw the Dow lose more than 600 points.

Winners in the market turnaround included Roku (up nearly 12%), Apple (10.34%), Amazon (9.5%), Netflix (9%), Disney (5.5%) and Comcast (3.24%), among others.

Analyst Tom Forte of D.A. Davidson said entertainment technology remains a key market due to ongoing changes to entertainment consumption in the home, which he said includes pay-TV cord-cutting and Apple’s resilience in smart phones.

Forte said “getting Android users to switch to Apple [iOS]” resonates positively to the bottom line in a saturated mobile phone market.

“What people are missing is the higher selling points for iPhones protects [Apple] from lower unit sales,” he told CNBC.

Kevin Landis of Firsthand Capital Management said big cap stocks like Netflix have long been “anointed” by Wall Street, and thus any market surge would benefit the subscription streaming video pioneer.

“Netflix has a market cap well over $100 billion,” he said.

The analyst contends Roku’s market cap of less than $5 billion translates into lots of “headroom” for the company that helped Netflix launched the SVOD market in 2007 with a branded Netflix streaming media device.

“What they have in common is that they’re both great cord-cutting plays,” Landis said. “Cord-cutting is a very persistent [market] trend that you can count on.”

Roku ended the third quarter with 24 million active households, and 10 million Roku users who do not subscribe to the traditional linear TV bundle.

“The best way for an advertiser to reach these consumers is to buy ads on Roku,” Laura Martin, analyst with Needham, told Investor’s Business Daily. “As viewers cut the cord, advertisers must follow viewers to platforms where they spend time.”

Regardless, Roku has seen its share price plummet 60% in 2018 – due in part to the company’s inordinate dependence on Chinese manufacturing, among other issues.

Following the day’s market surge, Forte said Roku is a “very interesting” stock heading into 2019 – despite spillover issues such as a possible trade war between the U.S. and China and rising interest rates.

“You could definitely look at the beaten-down names in entertainment tech and look for a rebound next year,” Forte said.

 

Report: 80% of Pay-TV Subs Also Stream OTT Video

With the pay-TV ecosystem continuing to lose subscribers to over-the-top video, a new reports suggests upwards of 80% of consumers committed to broadcast TV also stream video.

The report from Telaria, which markets software to manage video advertising, and Adobe Advertising Cloud illustrates the experiences, behaviors, and television usage among a spectrum of TV consumer segments as cord cutting continues to trend upwards and TV advertising models shift to accommodate viewer distribution channels.

Based on an online survey with 750 respondents representing pay-TV subs, over-the-top streamers and VOD consumers,the findings suggest brands that advertise on TV should also invest in connected TV as streaming digital video grows in popularity – including among pay TV customers. Advertisers will be able to access long-form, broadcast-quality programming that is increasingly available through OTT sources.

Indeed, about 42% of pay-TV subs think cable is necessary to view live sports, news and events – a key factor in their decision to keep the distribution channel.

When faced with the question of how to access TV content if they no longer had cable, 21% of pay-TV subs respondents said they had no idea where to turn. Only 50% of pay-TV subs are satisfied with the price they pay for content relative to the service they get, compared to 77% satisfaction among OTT subs. Another 55% of pay-TV subs said they found cord-cutting options confusing.

“Streaming services are providing premium video content at attractive price points and [pay-TV subs] are taking notice,” Karen Ring, head of research at Telaria, said in a statement. “Once [connected TV] services address the consumer confusion around streaming options and better communicate the live content available on their platforms, consumers will have a higher comfort level streaming. As viewers continue to increase time spent with CTV and ad supply increases, marketers need to learn how to create an effective advertising strategy that spans all types of TV.”

 

 

eMarketer: Cord-Cutting Escalating

AT&T bought Time Warner to support its over-the-top video aspirations. Disney will launch a branded OTT service next year. Netflix, Amazon Prime Video and Hulu dominate the domestic SVOD market.

The trend is clear: The number of cord-cutters — adults who have canceled pay-TV service and continue without it — will climb 32.8% this year to 33 million, according to new data from eMarketer. That’s higher than the 22% growth rate (27.1 million) projected in July 2017.

Overall, 186.7 million U.S. adults will watch pay-TV in 2018, down 3.8% from last year. That’s slightly higher than the 3.4% dip in 2017. Satellite providers will have the biggest decline, followed by telecom (i.e. AT&T).

“Most of the major traditional pay-TV providers now have some way to integrate with Netflix,” Christopher Bendtsen, senior forecasting analyst, said in a statement. “These partnerships are still in the early stages, so we don’t foresee them having a significant impact reducing churn this year.”

Another factor driving the acceleration of cord-cutting is the availability of compelling and affordable live TV packages that are delivered via the internet without the need for installation fees or hardware.

“With more pay-TV and OTT partnerships expected in the future, combined with other strategies, providers could eventually slow — but not stop — the losses,” said Bendtsen.

Meanwhile, the streaming platforms are growing at the expense of pay-TV. In fact, eMarketer has increased its future viewership estimates for YouTube, Netflix, Amazon and Hulu. Growth is being fueled by more original programming and demand for multiple services.

“The main factor fueling growth of on-demand streaming platforms is their original content,” added analyst Paul Verna said. “Consumers increasingly choose services on the strength of the programming they offer, and the platforms are stepping up with billions in spending on premium shows.”