Streaming services are just the new TV channels

by Nov 1, 2019Brightcove, CMMA Blog0 comments

Think channels, people, as in the TV channels you grew up with. Whether they were delivered over the air or via a cable/satellite/IPTV pay-TV service or even across a virtual pay-TV service like SlingTV or YouTube TV, we all grew up with channels.

And that is what we’re seeing in the evolution of the SVOD ecosystem. Channels. There are channels that consumers can hang around and binge years of content on. And, channels that can be flipped through to watch a single season of a particular show (Homeland on Showtime, for example). Even channels that can be visited occasionally for particular content (ESPN+ during college football season) and then changed (what we now call churn).

It’s just TV channels.

As the channel universe expands—Disney+ and Apple+ and the slew of offerings from AT&T/HBO and NBCUniversal’s Peacock—consumers will do what they’ve always done: Vote with their remotes. Change channels, churn, and build their own bundles and micro-bundles that will include content as specific as This is Us and Black-ish, subscribed to on a per-episode basis.

And that, really, is next-gen TV or TV 2.0 or simply TV (which is very likely to be watched on mobile devices, as we found with out with our Q2 2019 Global Video Index ).

New ‘TV channels’ add choice, not saturation

Much ado has been made over new entries to the market in the United States and globally. Pundits have been wringing their hands (or clapping gleefully) that the Big Three, Netflix, Amazon, and Hulu (OK, maybe the Big Two, sorry Hulu) were doomed. Apple TV+ and Disney+, they say, will unleash a flood of subscriber defections of biblical proportions.

Or, not.

I’m pretty firmly in the “or, not” camp, because Apple and Amazon are just two channels of an incomplete entertainment lineup that individual users are building for themselves.

Subscribers who are used to the massive catalogs of content from either Netflix or Amazon are not going to leave them for the nascent catalog of content Apple TV+ is offering, nor will they discard those channels for the slightly broader, but still limited catalog from Disney+. Instead, they’ll add a new channel. Or, two, or, three.

Because even as those pundits wring/clap their hands about the over-saturation of SVOD services and the rising costs, subscribers continue to build their bundles.

A survey from Piper Jaffray found that only about a quarter of Netflix subscribers had any interest in the new services from Disney (28%) and Apple (23%).

Said Piper Jaffray Analyst Michael Olson: “For those (Netflix subscribers) that do expect to use one of these offerings, the vast majority expect to also maintain their Netflix subscription.”

Instead, they’ll continue to trim their spending on traditional TV offerings, Olson said, adding, “most existing Netflix subscribers appear to be trending toward multiple streaming video subscriptions.”

Ah, the heavy price of streaming… or, not

You’ve all heard this: “The cost of streaming is higher than the cost of a typical pay-TV subscription.”

The rationalization? A Netflix HD subscription costs $16/month. YouTube TV, for live sports and access to the Big Four networks (ABC, CBS, NBC, and Fox) is $50. Of course, you’ll want HBO, Showtime, Starz, and Cinemax, and that’s another $45. Want to watch Man in the High Castle on Amazon Prime? Another $10 a month. Then, Disney+ will land for $7, you’ll need to add ESPN+ if you’re a big college football fan, for example. Another $5. And don’t forget about Apple TV+, because it’s going to be very cool: $5. Need more content? How about—as USA Today suggested would be a typical bundle upgrade for consumers—CBS All Access ($6), NBA League Pass ($29), PBS Kids ($5)? Let’s add a couple of niche streaming services, say three at $5 each.

The total for a typical streamer using this rubric? $193. AND, you’ll need an Internet service for another $70. OMG! Streaming will cost you $263 a month! Way more than pay TV, right?

Bad math is just bad math

Nope. It’s bunk. Because no one (except maybe me and it’s for work, really) has that many streaming services. In fact, a recent survey by Cord Cutters News found more than 91% of their audience have four or fewer paid streaming services . About 54% of the respondents say they subscribe to two or three services. And, unless you’re one of the 20% of Americans who don’t have the Internet, you’re not getting online just to stream… it’s part of your daily life.

More realistic? Netflix, YouTube TV, and Amazon Prime (because of the 2nd day shipping) are your core. That’s $71 a month. And, if you’re like most Americans, you can add another $15 a month because you churn through services as you discover and binge content. I mean, who keeps HBO after they’ve watched all of GoT, right? That’s $86 and you’re watching the channels you want to without paying for the 300+ channel package typical to pay-TV bundles.

Just to clarify something, if you’re a pay-TV subscriber spending $107 a month and you want HBO, and Starz, and Showtime, and Cinemax, you’re going to pay for them anyway. Don’t want to miss what’s on Amazon, Hulu, and Netflix? Cha-ching! You’re digging into the wallet again to the tune of $185. Add another $70 for that pesky Internet and it’s $255. (Adding Apple TV+, Disney+, PBS Kids, NBA League Pass, and CBS All Access takes it well over $300.)

So, let’s agree the cost argument is a moot point. Because it is.

Stay tuned.

Ed. Note: This post first appeared on the Videomind  blog.

To view our Partner blog, click here