Yes, Cable Can Be Replaced by Streaming TV in the Long Run

It hasn’t been simple to perceive, but the main reasons why people continue with cable are no longer restricted to cable.

The cord-cutting trend is still going strong, but that doesn’t mean people are signing up for additional streaming services like Netflix or Hulu, both of which are owned by Walt Disney. The average number of subscription video on demand (SVOD) services used by households in the United States was just under three before COVID-19. Similarly, while some households are ready to spend up to $30 per month on streaming video services, the majority of customers stick to a monthly video subscription budget of less than $20.

The final product? According to Leichtman Research Group, more than half of all U.S. households still have traditional cable, even if they also have at least one over-the-top streaming service. Consumers’ continued payment of rising cable prices is mostly due to access to sports and local news. Indeed, these two factors may be the only reasons why cable subscribers put up with high pricing.

What if, in the new era of streaming, cable giants like Comcast (CMCSA 1.28 percent) and AT&T (T 0.96 percent) overestimated the strength of their hold on their television customers?

They most likely have.

Consumers consider outcomes rather than methods.

It’s possible that the cable sector is looking at things incorrectly. Consumers don’t care how or who supplies their entertainment, and the remaining 80 million or so cable subscribers in the United States don’t see their over-the-top video subscription prices as an additional cost to their cable service. They are especially concerned about not spending more than $900 per year on pay television in any manner.

That, at least, is the gist of a recent market report from Ampere Analysis, which examined how much the average American household spends on video entertainment. When cord cutters go cold turkey and replace their linear cable service with streaming options, they wind up spending approximately the same as cable customers. As a result, Ampere estimates that any given household in the United States may soon have as many as eight streaming providers.

That was not a typo. Ampere Analysis acknowledges that Americans are more inclined than people in other countries to buy more streaming services, and that it will take sports to convince most homes to go beyond five over-the-top services and fully off linear cable.

Things are already moving in this direction, however slowly.

Gradually but steadily

Most streaming services currently don’t offer live events without a full-fledged virtual/streaming cable subscription, which makes hardcore sports fans unhappy. However, things are changing.

For example, Comcast’s new streaming platform Peacock promises to broadcast Premier League Soccer matches as well as the delayed Olympics next year. Viacom CBS (NASDAQ: VIA) (PARA 14.50 percent) provides NFL games through CBS All Access if CBS holds the rights to broadcast the game on its network. The NFL and Amazon renewed their deal in April, allowing Amazon Prime subscribers to watch Thursday night games that are also broadcast on Fox Corp.’s (FOXA 2.97 percent) (FOX 2.76 percent) Fox Sports. Although Walt Disney has yet to offer cable ESPN sports events on its streaming sports platform ESPN+, nothing is certain.

Finally, AT&T’s then-CEO Randall Stephenson said last year that “NBA, Major League Baseball, NCAA basketball — those are going to be really, really key parts for HBO Max,” though he didn’t disclose any specifics or a date. “It’s the same with news,” he added. It’s another of the eight SVOD services that Ampere believes U.S. consumers might someday subscribe to without boosting their overall pay-TV price.

Localized TV stations are increasingly cooperating to distribute their video feeds for free via streaming, bypassing cable providers such as Charter Communications and Comcast. VUit (pronounced “view it”), a coalition of more than 200 television stations, launched a service to stream their feeds last week. Each participant has promised to donate some original programming to the cause, which will most likely involve sports. Locast, a similar site, just added Detroit-based stations to its streaming portfolio, bringing the total number of markets covered to 23. NFL games are broadcast on these localized network affiliate stations (at least for the time being; the legality of the strategy is currently being debated).

Meanwhile, the 16 million households that employ aerial television antennas, according to Deloitte, can watch professional sports events broadcast by networks like CBS or NBC across all of their localized stations.

Streaming TV packages

Beginning valueQuantity of channels in the base bundleAre you able to add channels to the base bundle?Native channels? 1Cloud DVRQuantity of simultaneous streams
Sling TV Orange2$2530+SureNo$5 per 30 days for 50 hours, with channel restrictionsOne
Sling TV Blue2$2545+SureRestricted$5 per 30 days for 50 hours, with channel restrictionsThree
YouTube TV$5060+SureSureLimitless storageThree
PlayStation Vue$4550+SureSureAs many as 500 applications directly5
Hulu + Live TV$4565+SureSure50 hours of storage (improve to 200 hours for $15 per 30 days)Two (improve to limitless streams for $15 per 30 days)
DirecTV Now$5035+SureSure20 hours of storage (improve to 100 hours for $10 per 30 days)Three
AT&T WatchTV$1540+NoNoNoneOne
Philo$1640+SureNoLimitless storageThree
FuboTV$5580+SureRestricted30 hours of storage (improve to 500 hours for $10 per 30 days)One (improve to 3 for $6 per 30 days)

Forecast the future rather than the present.

It’s not yet enough to replace the overall amount of sports content available on cable. The major sports leagues and cable networks still rely on one other much too much for either to put their relationship at risk.

Live sports broadcasts outside of the usual cable media distribution system are becoming more practical, and those waters are being explored cautiously but steadily. It would be stupid to suppose that if a cheaper, more flexible manner of buying and selling sports and news material could be developed, it would not become the norm. Even if they have to piece together their combination of services, consumers will finally locate the lowest price for the same offering.

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