Peter Nowak is a Toronto-based technology journalist and author.
Is streaming the new cable? The question is top of mind after big announcements this week by Disney and CBS.
Disney says it will launch a new service in the United States in 2019 as the exclusive streaming home of its popular properties, which include Pixar, Star Wars and Marvel superheroes. The company is also launching an ESPN sports streaming service next year. CBS, meanwhile, is planning an international expansion of its U.S.-only All Access service, starting with Canada next year. It too will offer exclusive access to the likes of Star Trek, The Big Bang Theory and Survivor, where and when those shows aren’t already licensed to other streaming services.
The news comes just weeks after London-based DAZN announced its expansion to Canada, its fifth country. The $20-a-month service, which includes NFL football and UEFA soccer games, is now available.
With such options joining Netflix, Amazon Prime Video, BCE-owned CraveTV and others in offering exclusive content that can’t be had elsewhere, some consumers are concerned that history is repeating itself. With price tags typically $10 to $20 each, subscribing to all these services could add up to a monthly bill equal to or even exceeding the cost of cable. (Indeed, Netflix Canada announced on Thursday it would be increasing both its basic and standard monthly subscription rates by a dollar. The higher-end 4K plan is going up $2).
Higher monthly bills, and more content being restricted to subscribers of the various services, could provoke a revival of piracy. Netflix is, after all, widely credited with having reduced illegal file-sharing by making a large library of content easily available at a reasonable price.
Some commenters online are already promising a return to BitTorrent and other file-sharing tools, and it’s not like piracy has been stamped out altogether. About 7 per cent of Canadian households, for example, use Android set-top boxes that can access pirated cable content, according to networking company Sandvine. Both concerns have merit, but the proliferation of legitimate services means streaming is unlike cable – and that history isn’t repeating – in several key ways.
The main difference is that there are many options available – and they are all voluntary. Unlike cable, consumers only need to subscribe to the services that offer the content they want. They don’t have to pay for channels they have no interest in, which is the model that traditional cable television is built on. It’s unlikely that many households will sign up for every option available.
Streaming services are also easy to sign up for and cancel. There is no installation, hardware rental or 12-month contracts. An account and credit card is all that’s needed. The likely outcome is that many households will bounce between streaming services. They may subscribe to one or two for a few months, then cancel and move on to others once all the appealing content has been binge-watched.
U.S. figures support this likelihood. As estimated 53 per cent of Americans will subscribe to at least two streaming services by 2018, according to analysis firm Activate. That number will climb to a total of 62 per cent by 2020, with 43 per cent opting for two services and only 19 per cent choosing three or more.
Netflix will form the foundation of those bundles, Activate says, with Amazon and Hulu – currently available only in the United States – following suit. Relative late-comers such as CBS and Disney will face an uphill climb in battling their way into that top three.
The situation is likely to be the same in Canada. “This won't be the first time Johnny-come-lately [options] in an emerging [market] may be disappointed,” says Solutions Research Group president Kaan Yigit. “I am predicting one to two bigs per market and [the] rest niche.”
That’s not to say that each service won’t be successful in its own right. CBS, for one, expects to have four million All Access subscribers by the end of this year, which is evidently enough to fuel the company’s confidence for an international expansion. But each will have to deal with customer turnover, a metric known as churn.
Churn is already an issue for streaming companies, with an estimated 19 per cent of U.S. broadband households cancelling a service last year, according to analysis firm Parks Associates. For at least the newer ones, and probably existing services, increasing churn is going to be a challenge.
So far, Netflix, Amazon and the rest have been enticing subscribers to stay with slick apps and new features such as the ability to download shows and movies for watching offline without an Internet connection. Such innovations and additions will continue given the level of competition.
So are relatively low prices. With so many options so easily available and so easy to cancel, it’s hard to envision any of the streaming services engaging in egregious, annual price hikes.
In other words, the situation is the complete opposite of cable.