Monday, April 18, 2016

(The Big Disrupt) Pay-TV: 2016 isn't going to be a good year for Pay TV providers

With the news that Pay TV providers lost a concerning 1 million subscribers to cord cutting and look set to lose just over another million, the long talked decline and fall of the traditional pay TV market is more real than Pay TV executives are comfortable with. 
It's no secret that Pay-TV providers have been taking major losses in subscribers as more and more consumers choose to SVOD/OTT providers such as Hulu and Netflix. However with Pay TV providers bleeding subscribers and their reach sinking to record lows, pay TV providers are under more pressure to adapt than they've ever been. 

This current shift has been a long time coming and subscriber losses are likely  to grow to an extent pay TV providers can no longer trivialize. Pay TV providers aren't going to go out of business overnight as they still have millions of paying subscribers and some such as Comcast have strong positions in other lucrative markets. 

However, many pay-TV providers such as Dish Networks don't have strong positions in markets other than pay TV or SVOD which means that should the cord cutting trend continue to grow, many pay-TV providers will go out of business. The real losers in the accelerating decline of pay-TV providers is broadcast and cable networks as the decline of the pay TV market has forced Pay TV distributors freeze or outright cut their spending on content which affects networks when it comes time to negotiate retransmission fees. For years networks have played hardball with pay TV distributors negotiating large retransmission fees but with the pay TV market maturing and TV consumers migrating to SVOD offerings, broadcast and cable networks  are faced with pay TV operators who are in a position to tell them to either appraise their expensive retransmission demands or find another distributor. 

This sends a shiver down network executives' spines as they and pay TV providers know that the high and reliable retransmission deals they could secure with pay TV providers such are just not available with SVOD offering such as Netflix or OTT "skinny bundle" offerings such as Sling TV. Both SVOD and OTT content distributors are much more interested in actual shows rather than the networks that produce them so if the pay TV market collapsed overnight, things would get real for networks very quickly. 

Fortunately, for networks at least, pay TV providers aren't going to fall apart in one fell swoop but pay TV providers are and will continue to shrink their bundles offerings which is bad news for networks left out and multimedia proprietors like Viacom who've  made  money leveraging their popular networks for large retransmission fees for years.  

While pay TV providers losing a growing number of subscribers every is concerning, the recent trends in the FCC becoming more proactive in making the pay TV market more competitive is possibly the biggest worry for TV providers . The growing assertiveness of the of the FCC in the pay TV market has been underlined by the president who stated his support for legislation that would open up the $20 billion set top box market and make it more competitive than it's ever been. 

This is bad news for market leader Comcast who have doubled down on set top boxes and could end up to competing with companies like Google and Apple with much deeper pockets than theirs. It's also bad for other pay TV providers as they don't either the reach of Comcast or the cash of  either Google or Apple to maintain their market share. 

In any case, the FCC proposed move represents a clear win for consumers who get to buy and own set top boxes as opposed to rent them as they do now but don't let Comcast or AT&T hear you say that.  

No comments:

Post a Comment


Related Posts Plugin for WordPress, Blogger...