The Future of Streaming Media
For nearly four decades, cable television networks in America have been offering a stable bundled TV service for its consumers. Because pay-tv services have been increasing in costs and over the last 17 years customers are beginning to consider online streaming media services like Amazon, Hulu, and Netflix. With the recent convergence of media technology, the greatest asset in the TV service- technology is set to turn against owners. Bundled cable services have been the heart of Television in America, but recently there have been changes in consumer TV watching habits. In laying out the facts, bundled cable television offers a cheaper pay rate for consumers overall than live media streaming services ever will.
The fact is people no longer want the 189 channels offered but are only interested in a few that really matter to them. Recent research carried out has revealed that Americans only watch on average 17 of the over 100 channels provided by bundled cable television. In addition, Americans probably do not realize that half of their cable fees go to expensive channels such as ESPN and CBS. According to SNL Kagan, the typical American viewer pays 5.5 cents a month for the Hallmark Channel, 60 for CNN and up to $6 for ESPN alone- which is the most expensive channel (Wu, Hou, Zhu, Zhang, & Peha, 2001). The prices, however, are hidden on your monthly cable bill. Needham & Company estimates that ESPN amasses over $7 billion dollars from Americans regardless of whether you watch the channel or not.
Television owners are taking advantage of the customers’ lack of knowledge in per channel costs and leveraging that against them. For instance, Viacom own very popular and liked channels such as MTV and Comedy Central and at the same time, the programmers are the owner of some rather unlikeable editions such as Palladia. These companies bundle these channels together for distributor discounts. Channel bundling though unprofitable for distributors is a major revenue earner for Channel owners. For instance, Disney owns ESPN and has 100 million customers who pay $6 per month whether it is a grandmother, fathers, son or daughter household and even if you only tuned in for half a second.
ESPN did not always begin as an expensive channel, early in the days, it had problems in looking for distributors in order to deliver content to consumers. Increase in channels over the years in increased the bargaining power of TV bundling services.
Chris, a local cable TV dealer, maintains that currently, going la carte is perhaps best alternative for viewers who want to realize the most value for money. The takeover of bundled TV services will be difficult given then tremendous foothold they have on the market. He like many other Americans believes that not many people like ESPN and therefore should not be forced into watching the channel. However, experts predict that eradication the bundle TV service will not make customers any happier. Eliminating the bundles would cause a channel surcharge in costs and consequently only 20 best channels would remain in the market (Oyman & Singh, 2012). ESPN would cost approximately $25 per month, and the same goes for other channels, in the end, the resulting price for a la carte experience would be very high. Director of ESPN asserts that in bundled cabling, the most important aspect is choice and people should consider that when making decisions.
For media providers too there is a reluctance to shift to live streaming options because they would suffer a loss of over $70 billion should it happen and and further extinction of about 20 channels that are unpopular. Looking into the future personally, I do not think online media services will completely break bundle TV services as it cuts across the board in spreading costs and offering all services to everyone at subsidized prices (Video & Future, 2004). Not to say however that online streaming will be extinguished. It truly believes that a harmonized ground for the two will set the tone for the future of the industry. In addition, owners are also inclined towards maintaining status quo than opting for change. While Netflix might offer the most lucrative options in selectable episodes and series, the resulting effect will be an overpriced entertainment bill. Therefore, they will not be planning to break the bundle just yet. Apple, on the other hand, is reported to be in talks with Time Warner Company rather than in competition with it, this is a clear indication that bundle TV service is still here to stay.
Needless to say, cable bundling services is threatened and needs to look out in the horizons to what is happening and start adjusting accordingly. Streaming is bad news and streaming plus la carte is even worse. Currently, CBS and ShowTime have acquired both innovations and are disseminating content in this manner. The same is set to follow for Apple, and this many agree is the future of television, as we know it. Some cable companies have started optimizing and offering innovations such as slimmer bundle option to narrow down on most watched content. Whether it is too little too late, however, is a question of waiting.
References
Oyman, O., & Singh, S. (2012). Quality of experience for HTTP adaptive streaming services. IEEE Communications Magazine, 50(4), 20–27. http://doi.org/10.1109/MCOM.2012.6178830
Video, S., & Future, V. (2004). Streaming Video—the Wave of the Video Future! Library Media Connection, (December), 54–55. http://doi.org/Article
Wu, D., Hou, Y. T., Zhu, W., Zhang, Y. Q., & Peha, J. M. (2001). Streaming video over the internet: Approaches and directions. IEEE Transactions on Circuits and Systems for Video Technology, 11(3), 282–300. http://doi.org/10.1109/76.911156
