U.K. Pay-TV Operator BT Moving to Monthly Program Bundles

Taking a page from over-the-top video distribution, U.K. pay-TV operator BT is switching (beginning Feb. 21) from the traditional cable bundle to specific program packages priced on a month-to-month basis.

BT is also licensing Now TV from Comcast-owned Sky, enabling subscribers streaming access to myriad programming, including Netflix. The new range of program packages start at £10 a month ($13), increasing to £60 ($78) for the all-inclusive VIP package.

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The move comes as linear TV distributors continue to lose subscribers to lower-priced OTT video featuring programming without long-term contracts.

“Our new range of TV packs bring together the best premium services, fully loaded with a wide range of award-winning shows, the best live sports in stunning 4K and the latest must-see films – all with the flexibility to change packs every month – with quick and easy search to find what you want to watch,” Marc Allera, CEO of BT’s consumer division, said in a statement.

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Another Cable TV Operator Switching to Streaming Video

The migration from pay-TV to over-the-top video among distributors is gaining momentum.

Gigabit Minnesota, a regional pay-TV operator near Minneapolis, is getting out of the TV distribution business. In an acknowledgment of changing market forces toward streaming video, Gigabit has begun informing its 10,000 customers that it would cease distributing linear TV on Jan. 31.

In a statement, Gigabit cited increased carriage fees from content holders for the decision to focus on high-speed Internet service and help facilitate access to third-party online TV services such as Sling TV and Philo TV, among others.

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“The TV business is changing,” the company said. “This [content] cost increase makes our TV service just way too expensive so we’re going to be leaving [the business],” the company said.

The move follows a North Kansas pay-TV operator that announced it would switch toward broadband distribution and away from linear TV. Major pay-TV operators such as Comcast Cable continue to hemorrhage subscribers, including 149,000 subs in the most-recent fiscal period.

Gigabit, like Rainbow Communications in Kansas, is seeking to direct customers to online TV platforms, in addition to SVOD services such as Netflix, Amazon Prime Video and Disney-owned Hulu.

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It offers myriad high-speed Internet plans, including fibre-optic, priced from $69.95 for 500 Mbps. Indeed, Comcast said it added more than 400,000 broadband subs in Q4, and 1.4 million subs in 2019.

Comcast Loses 149,000 Q4 Cable Subs; Record 733,000 Subs in 2019

In another reminder the traditional pay-TV business model’s leak is widening, Comcast Cable Jan. 23 reported a drop of 149,000 video subscribers in the fourth quarter, ended Dec. 31, 2019. The nation’s largest cable operator lost a record 733,000 video subs in 2019 — underscoring consumers’ growing disinterest in the cable bundle and migration toward less-expensive over-the-top video distribution.

Comcast, which ended the year with 20.2 million video subscribers, is offsetting video sub losses with broadband — the lifeblood of video streaming. The company is one of the largest ISP operators, adding 424,000 high-speed Internet subs in the quarter; and 1.4 million for the fiscal year, including business customers.

Comcast ended 2019 with 28.6 million broadband subs, up 5% from 27.2 million subs at the end of 2018.

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In a statement, CEO Brian Roberts lauded the company’s broadband subscriber growth, adding the Comcast in 2020 would differentiate its broadband product in the U.S. through innovations like Flex and xFi Advanced Security; accelerating the deployment of Sky Q and launching a new broadband service in Italy.

The executive said Comcast has high hopes for the April debut of Peacock, the company’s first branded over-the-top video platform featuring both subscription and ad-supported services.

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“Underscoring our confidence in the continued success of our company, we are pleased to announce a 10% increase in our dividend, our 12th consecutive annual increase,” Roberts said.

Kansas Pay-TV Operator Switching to Streaming Video Only

In a sign of the times, Rainbow Communications, a 67-year-old pay-TV operator based in Everest, Kansas, has begun notifying customers that it will cease distributing linear broadcast TV channels, effective June 30.

In the place of pay-TV, Rainbow will give customers direct access to third-party over-the-top video distribution through its broadband network.

“Most of our customers have chosen this route because watching video now accounts for 80% of our Internet network traffic,” the company said in a statement. “Therefore, we have decided to focus our efforts on delivering the best Internet experience possible, and end our TV service offering.”

The nation’s largest pay-TV providers representing about 93% of the market lost about 1.74 million combined video subscribers in the third-quarter fiscal period (ended Sept. 30, 2019), according to Leichtman Research Group.

Rainbow said the switch could save pay-TV subs upwards of $600 in cable fees, excluding SVOD subscriptions.

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The former Northeast Kansas telephone operator with more than 6,000 rural subs is offering assistance to those customers looking to cut the cord with a “streaming care” program designed to determine the best alternative TV service that fits their household.

Beginning in February, Rainbow will assist customers in choosing which online TV streaming service is preferable based on their favorite channels, recommend devices and in-home installation of proprietary high-speed Internet service.

“Rainbow has been honored to be your TV provider through the years and looks forward to delivering a new exciting, inexpensive way to watch your favorite TV channels over our high-speed internet service,” said the company.

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NBCUniversal Inks Nordics Streaming, Pay-TV Distribution

NBCUniversal International has signed a distribution deal with Nordic Entertainment Group (NENT Group) for a wide range of kids and family content. The deal covers NENT Group’s Viaplay streaming service and pay-TV channels.

Viaplay viewers will be the first in the Nordic region to stream DreamWorks Animation series, “Where’s Waldo?,” “Cleopatra in Space,” “Dragons: Defenders of Berk,” in addition to NBC Universal animated series “Curious George,” among others.

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The deal includes DreamWorks Animation movie franchises “Shrek,” “Trolls,” “Kung Fu Panda” and “Boss Baby”; Illumination library titles Sing and Despicable Me, in addition to more than 30 ‘Barbie’ films.

In March, NENT Group and NBCUniversal extended their long-term exclusive content partnership, allowing new films from NBCUniversal to reach viewers in Sweden, Norway, Denmark and Finland on Viaplay and Viasat.

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“High-quality kids content is a cornerstone of Viaplay’s unique offering, and this latest agreement with NBC Universal means that our younger viewers can experience even more fantastic entertainment featuring their favorite characters,” Filippa Wallestam, NENT Group chief content officer, said in a statement. “We look forward to bringing the best of Hollywood to audiences of all ages across the Nordic region for years to come.”

Comcast Ups Focus on Broadband, Less on Video

Comcast may be the nation’s No. 1 cable operator, but doesn’t mean pay-TV remains the company’s primary focus.

Speaking Dec. 9 at the UBS Global TMT Conference in New York City, CFO Brian Cavanagh said ongoing changes in the linear TV market and consumer migration to over-the-top video have resulted in changing corporate priorities.

“We are well in-stride on the idea that yes, video is important,” he said. “We make money in video. And it’s important to our customers, our legacy and investments we’ve made to X1.”

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At the same time, Cavanagh said that while Comcast remains well-positioned to provide video through the traditional cable bundle, given the rise in streaming video, he said the company would stop attempting to provide the “full video experience” across the board and expect to make money doing so.

Comcast has lost more than 500,000 pay-TV subscribers this year.

“We want to give customers choices,” Cavanagh said. “We’re not going to chance unprofitable relationships, but rather give consumers choices where we maximize what we perceive the lifetime value of the relationship is to us.”

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In other words, Comcast will no longer market expensive pay-TV bundles to consumers distracted by loss-leading OTT services such as Netflix, Disney+ and Hulu.

Comcast CFO Brian Cavanagh

Indeed, as Comcast Cable continues to hemorrhage pay-TV subs, the company is focusing on broadband as one of the nation’s largest ISPs.

Comcast added 379,000 high-speed Internet subscribers in the most-recent fiscal period, up 13.4% from 334,000 net broadband additions in the previous-year period.

“The focus is always going to be broadband,” Cavanagh said. “And that might not have been what we said five years ago. It’s about attaching products where you can make incremental money and/or add stickiness.”

The CFO said pay-TV churn (subs renewing service) is under control in markets where the cloud-based X1 is deployed. But the company’s goal of having a video product in every household has changed.

“Customer satisfaction goes up if you give them the product they actually want. And broadband [not pay-TV] is that in all cases,” Cavanagh said.

TiVo Adds Amazon Prime Video App

TiVo Dec. 3 launched the Prime Video app on select TiVo devices to its pay-TV operator customers nationwide, making Amazon Originals, movies and TV shows easier to find.

Pay-TV subscribers with an Amazon Prime membership can stream content via the Prime Video app on select TiVo devices. With the TiVo Voice Remote, users can find what they are looking for by simply saying the name of the show, movie, or an actor’s name into the remote.

For example, saying “Find the show with John Krasinski” will display “Tom Clancy’s Jack Ryan” where the viewer can select from a list of episodes. Customers can also use a TiVo feature that gathers every episode of a series available from anywhere, to bookmark episodes for later viewing.

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“Adding the Prime Video app means fueling fandom for great content that reaches millions of households,” TiVo CEO Dave Shull said in a statement.

The Prime Video app on TiVo includes enhanced experiences, such as select 4K Ultra HD and High Dynamic Range (HDR) content and a behind the scenes look at movies and TV shows with X-Ray, powered by IMDb.

“Providing Prime members with great content and offering them an excellent viewing experience has always been our priority,” said Andrew Bennett, director of worldwide business development for Amazon Prime Video. “By making the Prime Video app available for select TiVo pay-TV operator customers, we can further expand the number of people that can enjoy Prime Video’s popular movies, hit TV shows and exclusive Amazon Original series as part of a seamless viewing experience.”

Disney+ Eyeing Pay-TV Partnerships

Taking a page from Netflix, Amazon Prime Video and wholly-owned subsidiary Hulu, Disney is reportedly seeking partnerships with foreign pay-TV operators for its branded subscription streaming video platform, Disney+.

Disney, unlike Netflix, Hulu and Prime Video, has existing pay-TV distribution for branded properties such as Disney Channel. As a result, the company is targeting regions where its SVOD service won’t cannibalize ongoing relationships.

Disney is in talks with Spain’s top pay-TV distributors ahead of its March 31, 2020 launch in Europe, according to El Español. The service would either partnership with existing distribution or launch as a standalone service — the latter fraught with challenges due to widespread piracy in the region.

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Regardeless, Netflix significantly expanded its domestic reach when it reached a distribution deal with Comcast, the nation’s largest cable operator.

The deal added incremental domestic subs for Netflix while greatly expanding Comcast’s broadband sub base. The cabler is one of the country’s largest ISPs.

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The company added 1.35 million broadband customers in 2019, underscoring the ongoing appeal of over-the-top video as consumers stream movies and TV shows in their home.  The broadband sub growth has helped offset pay-TV sub losses.

Kagan, a unit of S&P Global Intelligence, predicts that broadband-only homes will make up a third of all U.S. households by 2023, as reported by The Washington Post.

Netflix Adds 15 Pay-TV Providers in 2019

Netflix has deftly increased subscribers over the years by partnering with pay-TV operators (such as Comcast Cable) and offering direct access to its streaming video service.

The SVOD pioneer added 15 direct-access deals this year and now has access to more than 300 million pay-TV households who link (with a separate subscription) worldwide through their set-top box, according to new data from Ampere Analysis.

Netflix has more than 100 major partnership deals globally affording direct access to nearly half of all global pay-TV subs outside China.

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By the end of 2018, three quarters of pay-TV subs in Western Europe had contracts with Netflix partner operators. Netflix also had penetration to 86% of domestic pay-TV subs at the end of last year.

“The increase in the number of pay-TV partnerships with Netflix marks a distinct shift in the industry, as more and more of the streaming giant’s traditional ‘enemies’ cosy up through onboarding deals,” analyst Elinor Clark said in a statement.

Notably, Clark said Netflix was able to link with all the major pay-TV operators in France, a country previously hostile to the streamer’s arrival.

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Netflix still lags access to several large pay-TV operators in Central and South America, Asia Pacific and Central and Eastern Europe, though it is steadily working on increasing its reach. These markets (excluding China) play host to almost 400 million pay-TV subs, and Netflix currently has around 40 million subs in these territories, making these key target areas for the streamer to pursue.

“Of course, Netflix is not the only beneficiary,” Clark said. “These partnerships can also be lucrative for pay TV operators, providing them with an additional revenue stream when there may be downward pressure on their average revenue per user (ARPU) and, in some markets, cord-cutting.”

Study: 51% U.S. Consumers Pay for Online Video Service

On the day Disney launches its branded subscription streaming video platform, a new report finds more than 50% of survey respondents pay for streaming video, compared with 34% who pay for traditional pay-TV.

Online video platforms such as Netflix and Amazon Prime Video are watched more often than Pay-TV or free-to-air services, with U.S. consumers watching video on social media as frequently as the legacy TV platforms.

The findings are from the 2019 Grabyo Global Video Trends Report based on 9,690 consumer responses across the United Kingdom, United States, France, Italy, Spain, Germany and Australia.

The company’s website says it provides broadcasters and rights holders with “strategic guidance and support” to help them capitalize on commercial opportunities in sharing live video across the Web, social and mobile platforms.

Amid industry consolidation in the U.S. among content holders and distributors, the report found accelerating adoption of online streaming services, with Netflix now in 1 in every 2 households.

The decline in domestic pay-TV subscribers is evident in the consumption habits of consumers. Audiences are accessing video on social media as often as Pay-TV and more frequently across online streaming platforms.

The data shows a bifurcation in viewing habits across the market: If U.S. consumers don’t watch Pay-TV, they typically choose digital alternatives instead.

The launch of Apple TV+, Disney+, ESPN+ and HBO Max on March 31, 2020, is a response to this change in consumer viewing preferences, but this comes with a huge shift in business model for the leading players, according to Grabyo.

As consumers move away from pay-TV packages towards loss-leader priced online subscriptions, 75% of U.S. consumers watch video most often on YouTube, which reflects the move towards smaller screen device viewing and younger viewers moving away from traditional TV.

The report suggests consumers want flexibility, convenience and access to content across all devices at a low price point.

“OTT services are moving into the mainstream and are set to become the primary destination for video viewing in most markets,” CEO Gareth Capon said in a statement.

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Capon said 60% of survey respondents watch video most often on a smartphone. A generational shift in media consumption is happening that will have a profound impact on the structure of the TV market and the business models for video.

“Consumers under 25 now watch video on social media platforms more often than TV,” he said.

The move to online streaming and social media does not signal the immediate death of TV, but it does signal what needs to change, according to the report. Consumers want video services which are low-cost, available everywhere with a usage model that allows audiences to escape the TV schedule if they choose.