Cable operators still provide the majority (54 percent) of video-on-demand (VOD) services in the U.S., according to a 2016 survey report from the Video Advertising Bureau (VAB). Online services account for about 35 percent of all on-demand viewing, and satellite operators garner about 30 percent of consumption (more than one service provider could be selected).
Nevertheless, people are beginning to watch significantly less traditional television, and more content from subscription VOD platforms like Netflix. For example, just since 2011, traditional TV viewing by 18-24 year olds has fallen by 38 percent—and migrated to other activities (most likely streaming video, according to industry experts).
Yet, while some reports suggest that streaming video has supplanted linear TV, other data supports the notion that digital video is complementing rather than replacing traditional TV. The thought process for the latter stance is that digital video is growing simply because video content is more popular than ever. For the former position, consider that, while linear TV viewing has remained flat at best, streaming hours more than tripled between 4Q13 and 4Q15, according to SSRS data.
What this likely means for cable operators is a need to ramp up next-generation platforms, on-demand program availability and multiscreen access. VAB, a cable-backed group, reported that more than 73 million people in the U.S. access on-demand libraries from multichannel video programming distributors (MVPDs)—and that engagement of this content tends to be higher than with live TV. Also, these VOD libraries from pay-TV operators offer twice as many titles as Amazon and three times more than Hulu and Netflix.
VAB research shows that pay-TV VOD viewers, on average, watch 50 percent more of a 30-minute series than they did with live TV, and 33 percent more than a DVR-shifted show. The hope is that this finding will forestall the loss of TV advertising dollars.
VAB VP Evelyn Skurkovich explained that viewer commitment to MVPD VOD content—especially staying current with favorite programs—ensures that they “are willing to watch ads that can’t be skipped.”
Pay-TV operators are also responding to consumer demand for on-demand content by joining with Netflix and Hulu, integrating their services into set-top software via revenue-sharing deals. Recently, Hulu announced distribution agreements through Cablevision and other cable operators.
Other initiatives being taken by cable operators to thwart a streaming takeover include investing in cloud-based user interfaces that integrate features like voice-activated remote control into the TV-viewing customer experience. Operators are also offering “skinny” bundles, which give consumers more choice over the channels to which they subscribe.
Despite the rise of SVOD platforms and rapid growth of streaming, cable operators still have many options when it comes to retaining market share. After all, the audience that consumes content through cable operators is huge—and new pay-TV services may just hit the mark.