Streaming services are now a household staple; Netflix, Disney+, HBO Max, Hulu, Amazon Prime are but just a few. However, people still do remember the many options they used to prefer on television. The behemoth of cable tv is now tipping over, but is the world seeing an evolution, or demise, of this beast?
Source: Medianet
“I think [cable pioneer] John Malone’s initial dream back in the ’80s of a 500-channel universe, which we’ve long surpassed, has already come and gone. It was a great dream and a wonderful place to live in. I think the consolidation you’re seeing now is what you’ll see in the future.”
Being the group president of Discovery’s Travel Channel, Investigation Discovery, American Heroes Channel and Destination America, Henry outlines the crisis now faced by one of the largest technological industries of the latter 20th century. To get up to speed, it is important to understand what Cable TV really is, and why it is such a huge money-making machine.
When televisions were becoming the norm and radio frequencies were flinging wispy signals to be received by problematic antennas, physical networking was being born. The ability to deliver a channel of your preference directly to your screen without needing you to climb on to your roof and adjusting the dish, was revolutionary, and a number of companies jumped on board.
Rather than sending through one channel per cable, by the end of the 80s and well into the 90s, the technology evolved to allow a whole collection of over 200 channels to be available at your fingertips. With more options available than one could keep track of, cable tv became the most important element in a household to stay up to date, entertained and informed. Video did kill the radio star, and it was not done yet.
By the early 2000s and into 2010, cable tv kept growing. Companies created packages of channels for one’s preference, and these channels obviously needed content as well. Most of the cable network providers began generating scripted content, which are the many television serials that people have loved and treasured over the decades. The company that created the more popular show expected the most subscriptions, yet this was not the only revenue window.
Advertising, actually, is where most of the money comes in from. Advertising on any channel was prime intellectual real estate, and up for the highest bidder, pumping pipelines of cash into the network to keep constantly churning out more content interspaced with commercials. Added to this, premium sports broadcasting rights are another huge source of return on investments for cable companies, cinching the demand by buying expensive exclusivity rights and charging premiums to air it.
It seemed like this was an indomitable industry, ever growing, ever timeless, until streaming platforms and Video on Demand, came into play.
The change that is being seen today feel obvious now. “I think it’s 10 years, and there’ll be a total change of the guard,” says former DirecTV/AT&T Audience Network Programming Chief Chris Long, who is now a producer. "At some point, people will make that decision of ‘I can get everything I want [in streaming]. I no longer need to have 180 channels that I only watch 12 of." As a consumer, this is becoming the preferred choice. So what does it mean for the industry?
Recent studies showed that cable tv peaked in the USA at 105 million subscribers in 2010, and that numbers spiraled down by 20 million in 2017/2018. These are not small numbers, but entire swathes of communities are now 'cutting cords.' To counter this, most of the companies went into a panic and pumped their content onto streaming platforms under high licensing fees — such as AMC’s Breaking Bad ending up on Netflix.
While this rescued the show and cemented its superiority in drama, it also had a detrimental effect on AMC. People now saw Breaking Bad as a Netflix series, which built popularity and higher expectations on other Netflix original content. The way Netflix affected people’s behaviours has been a major selling point in them ditching the set-top box in exchange for a streaming application.
The obvious next step would be to change with the times, but according to Lauren Zalaznick, the former NBC Universal Chairman who ran several of the company’s cable channels and its digital networks, "someone has to be defending this beautiful, money-making, not-growing area of the business.” She believes chasing the pot of gold that is streaming, will do more harm than good.
“It seems ugly and messy and not fully baked to chase something much smaller with only one revenue stream. Advertisers still need to advertise! Do you want to put yourself in the place that newspapers found themselves, with no advertising and hardly any subscribers? What signal do you want to send your customers if you completely defund and make unattractive the place you get half your money?”
Truly enough, one main difference in revenue generation between streaming platforms and cable tv, is how cable attracts advertisers. Commercial breaks have been one major cash cow, but the change in audience demographics bellies a different facet. Gen Z, the fastest growing demographic in media consumption, has little or no patience for commercials.
The lifestyle they are growing up with has no space for scheduled tv shows nor commercial breaks, no sympathy to the amount of time and effort taken to develop content as they ‘binge-watch’ entire decades of scripted shows. Cable TV is not even close to a preferred option.
However, another interesting trend has also cropped up recently. Non-scripted shows, such as food and cooking shows, history shows and other previously unpopular channels, have been getting an increase in audiences. Especially during the pandemic, these types of channels have been rising in popularity, which may be an aspect worth looking into by cable tv companies. Perhaps their future lies in being a ‘barker’ channel like those in hotel rooms, or maybe they need to find a better balance between streaming and traditional cable TV.
Whatever the world holds, the answers will no longer be decades away. From a Maldivian perspective, our local Medianet has unveiled their streaming application. How they will fare against global behemoths the likes of Disney (Disney+, Hulu, ESPN+ and more) HBOMax, Netflix and even YouTube, might feel like a foregone conclusion; but if they can find the right niche for a uniquely Maldivian palate they might well be in with a sporting chance.
For that to happen however they should forego the traditional method of figuratively flinging content at the wall to see what sticks — they are quite literally only just tuning into a "channel" that has been relevant for much, much longer than they would care to admit.
