TV industry analytics firm Concentric has some good news for under pressure cable TV companies worried about the so-called “cord-cutting” trend.
Cord-cutting relates to the tendency among consumers to do away with their cable subscriptions in favour of video streaming services such as Netflix, which are perceived to offer a much wider range of content at better prices.
The increase in cord-cutting has been widespread, leading to fears that some cable TV providers might eventually go out of business if they’re unable to sell enough subscriptions. But a new report from Concentric this week says that’s unlikely to happen any time soon, as cable TV providers still hold a trump card in the form of live TV content.
Concentric’s report, “The Future of Streaming Video: How Entertainment Companies in the TV Industry Must Evolve”, says that further widespread cord cutting will probably only happen if streaming providers integrate live content such as sport into their offerings. If they do, it’s likely that a quarter of all existing cable TV subscribers would cancel their existing contracts by 2024, Concentric said.
Concentric said that streaming service providers would see subscription growth in the region of 87 percent if they were to add live programming such as sports, news and other events.
But that’s unlikely to happen. Netflix for example has already said on multiple occasions it’s not interested in moving into live sports coverage. If it did, the move would almost certainly be popular with Netflix subscribers, but it would also require a massive investment, not only on the licensing rights, but also the infrastructure needed to stream live content to millions of users simultaneously. Netflix’s current infrastructure probably wouldn’t be able to handle this kind of demand as its users never tune in to watch the same content at exactly the same time. But they would certainly do so if it began to offer live event coverage, and that would place an unprecedented strain on its servers.
Rather, what’s likely to happen is streaming services and cable TV providers will start working together. In that case, consumers will increasingly opt for deals that bundle video streaming content with cable and broadcast. The demand for such services is likely to grow by 10 percent through 2024, Concentric said in its report. As such, content deals that bundle streaming with cable, broadcast and satellite will likely command the largest market share within five years, it said.
“The way we consume content is changing,” said Dejan Duzevik, chief product officer and solution architect for media and entertainment at Concentric. “OTT providers like Netflix, Amazon and Hulu are disrupting the space, generating buzz about the death of traditional models like cable and broadcast. But consumers won’t be cutting the cord as soon as we might think. Concentric’s TV industry simulation forecasts that OTT subscriptions will continue to grow, but cable is here to stay.”
“Instead, we will see major changes across providers as cable, broadcast, OTT and satellite evolve to meet consumer demands,” Duzevik said.
