Ever since the second streaming video player came on the scene -- that means anyone after Netflix -- folks in the press and pundit game have been quick to characterize every move, every deal and every programming strategy in the online video segment as another salvo in the so-called "Streaming Wars."
That particular metaphor has been troublesome for a number of reasons. And at the Media+Tech Collective (formerly the Rocky Mountain Cable Association) virtual fireside chat July 22, MyBundle.TV founder and CEO Jason Cohen said what I have been thinking about for a long time. Cable operators who have been de-emphasizing video for years in favor of higher margin broadband service don’t want fewer streaming players, they want as many as they can get.
"I think the war metaphor is the wrong one," Cohen said on the virtual fireside chat.
"It's a revolution against the set-top box. Obviously, 'Cut the Cord,' took off, but it really should be 'Ditch the Box.'"
It’s been clear for awhile now that operators are moving toward a time when they will eventually abandon, or severely curtail, their video offerings in favor of aggregating programming apps and packaging them in ways that simplify the selection process for consumers. For their trouble, cable operators would likely take a cut from the fees the programmers charge consumers.
It's a concept that has been batted around the industry for awhile, and it doesn't really take a genius to figure out if the traditional video business is dying at the hands of the streamers, the next logical step is aggregating the streamers.
Already there are companies doing just that. Cohen launched MyBundle.TV in 2019, offering to find the right streaming services for subscribers based on their viewing habits and desires. MyBundle.TV partners with broadband providers -- WideOpenWest and CenturyLink are just two -- as well as some streaming services to help consumers navigate the growing number of streaming services.
And there are others, like Redbox -- which is planning to go public soon -- Amazon -- through its Amazon Channels -- Roku, Apple TV, Struum, TiVo (with TV Match Scores), all getting into the aggregation game.
There are currently about 75 million pay TV customers in the U.S., a number that has been steadily shrinking over the past 10 years. Cable operators, with about 47 million subscribers, have shed about 4 million customers between 2018 and 2020. At that pace, the industry would reach zero by 2045.
Bernstein media analyst Peter Supino has predicted that the satellite business would dwindle to nothing in five years. Others have said that pay TV will never likely reach zero, but it could get close as consumer viewing habits change and streaming just becomes more convenient. But whoever you believe, it’s pretty evident that the traditional video business is not a fun place to be nowadays.
Cable operators have been de-emphasizing video for several years -- every major operator has more broadband customers than video customers. Comcast, which held on to the video mantle the longest, had 31 million broadband customers and 19.4 million video customers as of March 31. Charter Communications had 29.2 million broadband customers and 16.1 million video customers as of March 31. Even smaller size operators like Altice USA (4.2 million broadband and 3.1 million video subscribers), have been focusing on high-value video customers -- those that take the highest programming tiers -- as they let less profitable ones cut the cord. In cable, just as in streaming, broadband is king.
And the kingdom is growing. More and more streaming services are signing on every day, and Cohen expects their rolls to increase, in part because of aggregators like his that make it easier to navigate the crowded landscape.
“The world doesn't have to be just Netflix, Amazon and Hulu,” Cohen said. “If aggregators like us didn’t exist -- it’s not just us, there are others -- it would be.
“We very much think we’re expanding the streaming markets,” Cohen continued. “So we think of the streaming market as not a war, it’s going the other way. There are going to be more and more players that are going to be able to build a business.”
Cohen named some up and coming streamers like FrndlyTV (opens in new tab), which offers 19 channels like the Hallmark Channel, CuriosityStream, Weather Channel, UPTV and LocalNow, for $5.99 per month, but said Sinclair Broadcast Group’s plans to launch a direct-to-consumer version of its Bally Sports RSNs in 2022, could be “really interesting.”
Sinclair has said it would launch the direct-to-consumer offering in 2022, and reports have speculated that they would charge about $23 per month for the service. Sinclair has disputed that figure. And while the venture into standalone streaming RSNs has had its share of controversy, no one has denied that some type of streaming offering is necessary.
“They need to have a direct-to-consumer offering, and consumers want it,” Cohen said, adding that MyBundle.TV customers have been asking for more sports. He pointed to a recent survey of MyBundle.TV users who had selected an RSN as a channel they would be interested in, 71% said they would continue to pay for a regional sports network even if their team was out of playoff contention early in the season.
The MyBundle.TV survey involved 1,712 respondents, all people who had used the service and indicated that they needed their local RSN. Cohen said 29.5% of the respondents had cable/satellite TV, 51.5% had a vMVPD, 6% stream but have no Live TV and 10% stream but use an antenna or Locast for local channels. The respondents were asked if their team was performing poorly during the season and they could cancel at any time, would they?
According to Cohen, 71% said, "No way - I'll watch at home with a paper bag on my head until the last game;" 13% said “Yes - but after 3/4 of the season”; 12% said “Yes- but after half the season;” and 4% said “Yes - but after 1/4 season.”
Although the respondents all appeared to be heavy sports fans and were already interested in paying for RSNs, it is contrary to conventional wisdom that predicts many RSN customers would drop the channel if their team was out of contention at mid season.
The respondents weren’t asked if they would keep the service for the full year, just until the end of the season, which in baseball lasts about five months. Still, that could be encouraging news for Sinclair and other RSN owners considering the leap into direct-to-consumer offerings.
Cohen said MyBundle.TV also asked those respondents that have already cut the cord how much they would pay for a direct-to-consumer RSN service in season, 16.7% said they would pay $31 or more, 8% said $26-$30, and 8% said $21-$25. Rounding out the survey, 11% said they would never pay for it, 25% said $1-$10, 17% $11-$15, and 14% said $16-$20.
For respondents that had cable or satellite TV, MyBundle.TV asked if they were to drop their cable or satellite service and could subscribe to a service that just offered their local sports teams, how much would they pay for it. Cohen said 23% said they would pay $21 or more per month for that sports service, while 6% said they would pay $31 per month or more.
“There is definitely a market for people who will pay $20 per month or more,” Cohen said in an interview. “The question is, is the market big enough to offset if it disappeared from cable tomorrow.”
Cohen said later that he was most impressed with the 71% figure because it shows that people are interested
“That’s a big deal. Because if you can get someone to pay $20 per month, are they going to pay for one-and-a-half months or five months? I would venture that that’s going to be the difference maker on the business model,” Cohen said in an interview.
While the sample did only include people who wanted their local RSN -- which he said is also the target market for these DTC services -- it also presents options for offering different packages of games at different prices.
“Sports fans are sports fans,” Cohen said. “If I was building the product, there is probably a world where for $20 a month you get access to every game and for $10 a month you get access to half the games. Maybe those fans who said the most they would pay is $10 a month are people who aren’t watching 162 baseball games and they'd love the opportunity to catch a game a week. I think there is definitely going to be an opportunity for there to be classic price discrimination to get that net even wider for Sinclair.”
Mike Farrell is senior content producer, finance for Multichannel News/B+C, covering finance, operations and M&A at cable operators and networks across the industry. He joined Multichannel News in September 1998 and has written about major deals and top players in the business ever since. He also writes the On The Money blog, offering deeper dives into a wide variety of topics including, retransmission consent, regional sports networks,and streaming video. In 2015 he won the Jesse H. Neal Award for Best Profile, an in-depth look at the Syfy Network’s Sharknado franchise and its impact on the industry.
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