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New Year Brings New Tweaks To Cable Model

The new year is barely a few weeks old, and the winds of change already seem to be blowing through the television industry. You know things are different when presentations from over-the-top service Netflix and cable’s TV everywhere platform opened last week’s annual Television Critics Association Winter Press tour, where TV writers gather to see the lineup of new shows from traditional cable and broadcast networks.

Want further proof? Arguably the biggest story coming out of last week’s International CES wasn’t the latest Apple product or the biggest Samsung Ultra HDTV, but rather Dish Network’s Sling TV product, streaming 12 cable channels to consumers for $20 without a set-top box.

Clearly the television industry is reacting to the rapid shifts in consumer viewing habits. A recent Leichtman Research Group survey found that more than three-quarters of U.S. homes have a DVR, subscribe to Netflix or use video-on-demand from a cable or telco provider, up from 70% last year. Additionally, 26% of homes use two of those services, and 11% use all three.

At the same time, multichannel TV subscribers are projected to drop from 103.9 million in 2014 to 102.9 million by 2019, according to Magna Global.

Yet some industry observers are actually optimistic about the future of the subscription cable package, and Dish’s Sling TV package may actually build a case to keep the traditional cable package in play. Offering subscribers access to 12 channels including ESPN, TNT, Food Network and Disney Channel for $20, Dish’s Sling TV is a single stream that may be appealing to individual consumers but may prove to be cost-ineffective for a family of four, which would have to buy multiple Dish Sling subscriptions to satisfy all members.

Under that scenario, the average $75-per-month cable bill for more than 200 channels looks pretty good.

While Netflix, Hulu, Amazon and other over the top streaming services are producing quality original programming, arguably cable networks are producing the best original dramas and other original programming in its history. Most of it can be streamed by cable subscribers to any device through the industry’s TV Everywhere platform for free.

Subscribers are slowly getting a clue about TV Everywhere. CTAM during its CTAM panel last week said that 49% of cable subscribers have streamed content from a cable network digital app, up from 14% from the same period a year ago.

Consumer viewing habits are indeed changing, but the projected demise of the current cable business because of those changes is a bit premature.