The television industry has been thrown a curve ball by the emergence of over-the-top (OTT) providers such as Netflix, Hulu and Amazon Prime. As such, subscribers continue the trend of trading video service for better, faster internet speeds. According research from Leichtman Research Group, 13 of the largest pay-TV providers in the US lost about 300,000 net video subscribers in 2Q 2014.
Besides increasing costs, it’s possible one of the more significant reasons why cable subscribers are shifting is because they no longer want to pay for programming packages that include a slew of channels they don’t ever watch. According to Nielsen’s Advertising & Audiences Report, the average U.S. TV home now receives 189 TV channels; however, consumers only tune in to an average of just 17 channels.
In hopes to solve this problem, cable companies are exploring “a la carte TV” in which customers only subscribe to channels they specifically select. Blazing the a la carte TV trails are cable companies Time Warner and Dish Network, both of which are making their most popular channels available online to consumers without a satellite subscription.
At this year’s CES, Dish announced that it will offer consumers access to ESPN, Disney, Food Network and ABC Family, among other channels, through its TV everywhere service, Sling TV. For as little as $20 per month, consumers will be able to watch their favorite shows via any Internet-enabled device—which means subscribers can say goodbye to contract requirements and hardware installation. Time Warner has also unveiled plans to launch a stand-alone HBO subscription in which popular shows, such as the “Games of Thrones,” will now be available to those who don’t subscribe to cable television.
By offering subscribers the option to pick and choose what channels they want, cable companies are hoping that consumers will be deterred from cut the cord completely. They’re also hoping that this new pricing model will help trim video losses while continuing to drive new, deeper Internet revenues.