Cutting the Cord: The TV times, they are a-changing
You don't need a weatherman to know which way the wind blows, as Bob Dylan sang. Another of his lines: things have changed.
You don't need a technology soothsayer to see things are changing in the realm of television delivery.
The pay TV exodus is continuing slowly but surely. Suddenly, traditional content companies are making moves to accommodate them.
In the last four weeks, CBS has launched two different online video services, the subscription-based CBS All Access with TV episodes recently broadcast and classics such as Star Trek, and the 24-7 ad-supported CBSN news channel with live anchors and on-demand video stories.
CBS also announced plans to launch a standalone Showtime service next year for those who do not have pay-TV service, a move that matches the strategy of competitor HBO.
"The whole media landscape is changing so rapidly and nobody really knows where it is going," said Mark Feldstein, a professor of journalism at the University of Maryland who I talked with after the CBSN announcement last week. "All these big moguls and CEOs are placing multimillion to billion-dollar bets ... (and) there's a lot of guessing. Obviously, the old system is collapsing and no one is sure exactly what is going to replace it. Convergence, synergy and digital, all that stuff has been talked about for years, but it does seem to be happening."
What has caught the attention of traditional media companies is the rising number of U.S. broadband Internet-served homes without pay-TV service. Some of these are "pay-TV refugees," as research firm The Diffusion Group has dubbed them, customers who have dropped their service and gone strictly to the Net for video.
The exodus was evidenced in recent earnings reports from pay-TV providers. Cable companies Comcast and Time Warner Cable in recent weeks said that they had lost 81,000 and 184,000 pay TV subscribers, respectively, during the third quarter. Satellite TV providers DirecTV and Dish last week said they lost 28,000 and 12,000.
Telecom TV providers fared better, with Verizon FiOS adding 114,000 new video customers and AT&T gaining 216,000 U-verse TV subscribers.
Lucky for pay-TV services that, in general, the average customer bills continued to rise to help offset any declines and churn. The average DirecTV customer, for instance, pays $107 monthly.
But pay-TV companies that also provide broadband connectivity have another highlight: more customers are adding -- and switching to --broadband. Comcast added 315,000 broadband customers; TWC, 108,000 during the third quarter.
About 14% of adult broadband users do not use a legacy pay-TV service, up from 9% in 2011, The Diffusion Group has found. Over the next few months, the number of broadband homes is expected to surpass the number of pay-TV homes for the first time, it expects.
"Today, residential broadband services are used in 75% of US households, meaning 13 million broadband households are currently doing without a traditional pay-TV service," says Diffusion Group president Michael Greeson in the report.
Expect traditional pay-TV companies and networks to continue looking for ways to keep subscribers, as well as cater to pay-TV refugees and those who haven't ever had pay TV.
Meanwhile, we await the impending online video offerings from Dish, Sony and Verizon, all of which have are expected to have several content companies on board.
With all these currents of change blowing, Greeson says, "you have a formula for a metamorphosis of the pay-TV industry."
"Cutting the Cord" is a regular column covering Net TV and ways to get it. If you have suggestions or questions, contact Mike Snider via e-mail. And follow him on Twitter: @MikeSnider.