Are Streaming Services Replacing Traditional TV?
Gone are the days when people spent so much time browsing through hundreds of TV
channels to find something worth watching.
Thanks to the boom of mobile apps, the practice of flicking through several TV stations
has taken the back seat as media streaming services are now the preferred choice
amongst viewers. With several on-demand service providers like Yes Movies, Amazon
Prime, and Netflix, viewers are now able to stream their TV shows and favorite films via
mobile apps.
This rapid growth in the popularity of streaming services and apps has seen the well-
established entertainment networks and brands like BBC and Channel 4 adapt to the
online revolution and offer on-demand streaming to their viewers.
In this blog post, we would highlight how the ability of viewers to access videos online
via streaming services is posing a major threat to the traditional TV industry.
It is important at this point to note that many long-time cable users are dumping their
providers for online content.
This begs the question: Are streaming services like Hulu and Netflix going to
replace traditional TV?
Fact remains that due to the growing popularity of streaming services, there has been a
waning demand for cable.
Why are people choosing streaming services over cable?
In the third-quarter of 2013, providers of broadband and TV services saw over 687,000
subscribers switch to online-video services. This was, at the time, the worst plummet
the cable industry had ever experienced. As of today, the number of people opting for
online streaming continues to grow even further.
Why this trend?
Apart from the ability to access content on demand with online streaming, traditional TV
viewers have to deal with increasing subscription costs for selective packages. And if
recent TV ratings are anything to go by, then traditional TV is poised for a steady
downward spiral.
Cable TV providers are ranked last in the American Consumer Satisfaction Index and
even more evident is the fact that consumers are not only seeking alternatives to their
cable operators, they are also exploring these alternatives. One of such alternatives that
users are exploring is over-the- top (OTT) technology. OTT’s are systems that provide
viewers with television content via broadband connections.
With these OTT platforms like Hulu, Netflix, and Amazon bringing content to just about
anyone with an internet connection, for a fraction of the cost of cable subscriptions,
customers (with emphasis on customers strapped for cash) are inclined to shift to OTT.
While cable service providers seem to have run out of ideas, OTT sites are upping the
ante and giving them a run for their money. As of today, OTT sites are not only
providing contents like TV content on demand, these platforms are now creating their
own exclusive content for the purpose of attracting viewers. Platforms like Netflix are
now partnering with established production companies to create new TV shows and
reportedly spent millions in the making of their hit TV show “Orange is the new Black”.
But it’s not just Netflix going into original programming; Hulu and Amazon are rowing a
similar boat as well with Hulu Plus announcing plans to quadruple investment this year
in original programming. Amazon, on the other hand, via Amazon Prime would be has
financing five new series as well.
With the success of “Orange is the new Black”, the phrase “Netflix and chill” gained
popularity and helped propel the platform globally.
The Netflix and Chill Effect
Netflix is one of the most popular streaming platforms and played a quintessential role
in the transition from traditional TV to a world of online media streaming. This service
started as a computer-based service but then surprised everyone when they created a
mobile app downloadable on Play Store and the App Store which allowed users to
stream movies and TV content anywhere, anytime.
Netflix has since grown to a subscriber base of 104 million subscribers and counting.
Netflix generated a whopping $8.8 billion in revenue in 2016.
The Impact of “Millenials” choosing live streaming over cable
Most people subscribing to the OTT platforms are people who use mobile devices
regularly. Although, most OTT viewers are below 35 years, even older people are
starting to tilt in the same direction.
Studies found that the use of WiFi streaming devices and smart TVs in the US and
Britain has increased significantly. Many homes are beginning to opt for these OTT
apps in place of traditional TV channels.
So would OTT Systems replace traditional TV?
The hard fact remains that the declining demand for traditional TV would not subside.
Perhaps this is why many American cable companies are now partnering with these
OTT operators in a bid to integrate some online programs into set-top- boxes, which is a
move similar to their international counterparts.
Netflix recently agreed to a deal with UK-based Virgin Media as did Com Hem
(Sweden’s largest cable television system).
Conclusion
Since the inception of OTT technology, the service has been perceived as a viable
alternative and threat to the cable industry.
But
Seeing as the demand for OTT is on the rise and cable services have a somewhat
larger fan base, both parties are learning that their services are probably best when
served together instead of separately as competitors.