By James Hirsen, Special for USDR
Audiences for broadcast and cable television have been gradually diminishing over the last several years.
A recent event, which was held by the Cabletelevision Advertising Bureau (CAB) for entertainment advertising professionals, explored the reasons for the decline in viewership.
According to the CAB, roughly 40% of the ratings shrinkage that occurred in the last six months of 2014 was caused by people who opted to obtain their entertainment content from subscription streaming services, which included Amazon, Netflix, and Hulu, among others.
Television as we know it has already been in an era of long-term structural descent due to a migration of viewers toward streaming alternatives. The bottom line is that what is referred to as subscription video-on-demand, i.e., watching Netflix and the like via the Internet, has resulted in a significant drop in television ratings.
While the number of traditional TV viewers is on a downward slope, the size of the streaming audience has been mounting; this is due in part to the proliferation of smartphones and tablets. According to TDG Research, a research and advisory firm that studies broadband media, the number of hours that the public engaged in streaming Netflix content was 31% higher in the last quarter of 2014 than in the previous year.
Cable companies, which in general are dependent on the practice of “bundling,” i.e. packaging channels together and charging a sizable fee for the inflexible arrangement, are reeling as the demand for a la carte programming increases.
The recent announcement by HBO that it will begin streaming a stand-alone service on Apple’s iTunes in April 2015 is a stunning game changer for the entertainment world. At a cost of $14.99 per month, those who do not have cable or satellite service will nonetheless be able to obtain virtually all of the content offered by HBO.
The new service, dubbed HBO NOW, will launch just in time for the advent of the fifth season of the extremely popular series “Game of Thrones.” In the streaming process, HBO will obtain access to millions of Apple consumers, who will then be able to sign up for HBO using the same method they routinely utilize to obtain their favorite music and apps.
Many of these potential HBO customers are millennials who are either “cord cutters” that have abandoned cable, or those individuals who for a wide variety of reasons are disinterested in subscribing to such services.
Numerous cable customers who are actually hostile toward companies that provide broadband still choose to remain as subscribers. They often cite two channels as an explanation for why they would continue with their current customer status despite their dissatisfaction: HBO and ESPN.
However, now that HBO has taken the streaming plunge, other premium cable networks are looking hard at following suit. Les Moonves, President and Chief Executive Officer of CBS, confirmed that Showtime is moving in the streaming direction.
“The days of the 500-channel universe are over,” Moonves said. “People are going to be slicing it and dicing it.”
In another sign of streaming going more and more mainstream, traditional perennial broadcast television favorites are now popping up as part of big streaming deals. The ever popular show “Friends” was recently picked up by Netflix at a reported cost of $500,000 an episode.
Hulu has acquired the exclusive subscription streaming rights to the CBS procedural crime drama “CSI.” The financial details of the transaction have not yet been disclosed but industry sources believe it is a considerable figure.
Interestingly, the largest streaming companies are now chasing the longtime sitcom phenom “Seinfeld,” the results of which could end up being a mega-entertainment deal that tops $100 million.
One can almost hear the “Seinfeld” character Elaine giving cable executives a piece of her mind and then with a trademark shove emphatically telling them to “Get out.”