Almost everybody has one at home: a TV. A lot of the TV’s that are being sold nowadays are so called smart TV’s, or are made smart with devices like google Chromecast. What makes them smart is the option to connect to the internet and make use of apps. This in combination with the ever growing streaming services provided online could be a potential threat for the traditional pay-TV market(cable, satellite, or telco-TV) as we know it. Television executives are already sounding the alarm. With a 3% decline in the overall TV viewing time in the U.S. in 2015, were 50% was accounted for by Netflix, the question to ask is: Is the traditional pay-TV really going to be replaced with streaming services, or is the ‘death of TV’ we hear about just an illusion?
Recent research from Marketing Charts in conjunction with Newfronts claims that viewers prefer digital video to primetime TV. The results show that people associate streaming services with terms such as “innovative”, “exciting”, “edgy”, and “worth my time”. And with a recent survey from AllFlicks stating that 75.5% of people who have experience using Netflix are convinced that a streaming service like Netflix is the ready replacement for traditional TV, the end for traditional pay-TV seems to be just around the corner. But still almost every household has a pay-TV contract. A big explanation seems to be imbedded in age difference.
The role of age
Age seems to be an very important factor for the liking and using of the new ongoing streaming trend. Researches like the one from TDG Research show a distinctive age gap in TV viewing between younger and older Americans. The researchers asked adult broadband users who were using traditional TV as well as subscription services the following question: “if you had to choose between traditional pay-TV service (cable, satellite, or telco-TV) and subscription streaming video services, which would you choose?”. As you would expect the responses differed strongly by age group as shown in the table below. The older people tend to stick more to the traditional way of watching TV while the younger generation prefers an subscription on the streaming of videos. This result is backed up with other study’s worldwide confirming this distinctive distribution, such as the figure released by Ofcom, showing the results in the UK.
It is clear that young people are driving down the average time spend watching traditional TV while the older generations are keeping traditional TV alive. With an increase in supplied streaming services more and more consumers are shifting towards streaming, giving them the possibility to watch what they want, when they want. This makes it hard to imagine a future with traditional TV as we know it. However I wouldn’t call it the ‘death of TV’. With networks such as HBO and CBS already having launched their own online offerings it is clear that traditional TV channels are evolving and finding ways to survive, extending beyond the traditional television screen and including custom (not full TV package) programming from new sources that can be accessed in new ways. This in combination with TV companies pivoting their business models to distribute on social platforms and the formation of partnerships with digital media brands to create new content will probably secure the future of TV companies for the following years to come.
So, will streaming change the way we use our television as the competition becomes increasingly direct in the years to come? It’s definitely something that’s worth keeping an eye on.
References
BI Intelligence. (2016, July 12). More young people are watching less traditional TV. Retrieved from http://www.businessinsider.com/more-young-people-are-watching-less-traditional-tv-2016-7
Loechner, J. (2016, June 01). Traditional TV vs. Streaming Video; It’s In The Eyes/Age Of The Viewer. Retrieved from http://www.mediapost.com/publications/article/276939/traditional-tv-vs-streaming-video-its-in-the-ey.html
Lovely, S. (2016, March 02). 76% Of Netflix Subscribers Think Netflix Can Replace Traditional TV. Retrieved from http://cordcutting.com/76-of-netflix-subscribers-think-netflix-can-replace-traditional-tv/
Spangler, T. (2016, March 03). Netflix Caused 50% of U.S. TV Viewing Drop in 2015 (Study). Retrieved from http://variety.com/2016/digital/news/netflix-tv-ratings-decline-2015-1201721672/
Hi Dennis, thank you for your interesting blog post. I think the problem you pointed out in your blog is one of the most important things that is thought about right now in the world of traditional pay-TV. An interesting development in the world of traditional pay-TV is the fact that customers of for instance Ziggo, a Dutch TV provider, can watch whatever program/TV-show whenever they want on whatever device they want. With the introduction of the Ziggo app you can watch TV wherever you are. This shows that they are really working on a solution to keep their viewers. The one big drawback here is the fact that programs of commercial TV operators show commercials, which on the other hand is a big advantage of streaming services where you can watch entire episodes without having to watch commercials. I think this is also a very important reason why people stop watching traditional pay-TV.
Bankrate (2014). Cost of cable TV vs. Internet streaming. Available at: http://www.bankrate.com/finance/smart-spending/cable-tv-vs-internet-streaming-the-costs-2.aspx [Accessed 07 October 2016].
Thanks for this interesting post Dennis. The subject you pointed out in your blog is very up to date which makes it very interesting. I myself use Netflix and have a TV-contract with Ziggo. There are a few huge differences between streaming services and pay-tv. First of all, the commercials that traditional TV shows and Netflix doesn’t. Secondly, the content that both services have are very different. Netflix only has movies, series and documentaries. Traditional TV also has these three but they also show programs such as the news, which a lot of people watch every day. We can also think about talent shows and gossip programs which Netflix doesn’t provide. I think these programs are an important reason why a percentage of people keeps watching traditional TV nowadays.
Dear Dennis, thank you for your interesting post!
You accounted the age of customers to be a reason for using traditional TV instead of online streaming. I wrote a similar article about the television era coming to an end. In my opinion, the next generation will not watch traditional television like us when we were young. It is very good that you acknowledged the fact that age has to deal with this problem, but I think it is only a matter of time until the generation of traditional TV watchers is gone. As you mention, research has proven that viewers prefer digital video over primetime TV. This is another example of the disappearance of the traditional TV. You also state that the younger generation prefers an subscription on the streaming of videos. The fact that this younger generation is the future, is another example of the predicted disappearance of the traditional TV. If the age of customers is the only thing that stops the end of the TV, it is logic to say that in a few years the traditional television is vanished.
To answer your question, I think streaming will in fact change the way we use our television. The competition between television broadcast companies will only increase with large steps in the upcoming years. I am not saying that television broadcast companies will disappear in the future, but I think that an average household doesn’t own a traditional television in 20 years.