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Winter Is Coming to the Cable Industry

The fight for the Iron Throne will be televised. And recorded. And downloaded. And streamed.


Quick survey, “Game of Thrones” fans: How do you plan to watch Sunday night’s season finale? Will you watch the Lannisters live on TV? DVR the Dance of Dragons for later in the week? Stream House Stark through your HBO or cable provider’s app? Maybe you’ll wait until Season 5 comes out on iTunes and then binge. Or Periscope into someone else’s viewing experience to find out what the Mother’s Mercy has in store for Cersei.

Not so long ago, when none of these options existed, we all had access to the same limited, linear TV channels. In April, eight million people tuned in to watch the Season 5 premiere of “Game of Thrones” — but add in streaming and DVR viewers, and that figure goes much higher. Today, there are more ways to consume video content than ever. This rapid expansion of viewing options is fueling our shift from couch-surfing to content-streaming. The viewing experience is increasingly being defined by myriad attributes that we choose, including time, device and location.

With more than 22 million pay TV subscribers nationwide, Comcast is known by most people as a cable TV — not broadband — provider. Yet in its last quarterly conference call, Comcast announced the company’s broadband subscribers surpassed its number of cable-TV subscribers for the first time in company history. In the first quarter of 2015, Comcast gained 407,000 Internet-service subscribers while shedding 8,000 video subscribers — the continuation of a shift long under way, a trend we’ve seen quarter after quarter. The cable industry has had to reinvent itself as viewing habits evolve.

Television- and Internet-subscriber differentials are the first threshold we cross along our TV viewership transformation; however, revenue will likely follow in the years to come. For example, Comcast reported that video subscribers accounted for $5.3 billion in revenue, compared with $3 billion in revenue from broadband subscribers in the first quarter.

But where the eyeballs go, the dollars are likely to follow. And as long as George R.R. Martin keeps spinning tales about the great houses of Westeros — and David Benioff and Dan Weiss continue to bring them to life via video — viewers will invest in new ways to watch them, be it in their living rooms or on their smartphones.

Cable is not isolated within this fundamental shift of how American households consume entertainment content. According to the Leichtman Research Group, the top 13 pay TV providers in the U.S. — across cable, satellite TV and telecom companies — saw a net loss of approximately 125,000 video subscribers in 2014. With more than 95 million customers, however, traditional paid television services won’t disappear overnight.

What are the forces driving this transformation?

  • There are more homes with always-on Internet connectivity than ever before. In 2000, when roughly half of U.S. adults were online, only 3 percent of households had broadband connectivity. Today, eight in 10 households have Internet connectivity — and only 1 percent of them rely on dial-up, according to Consumer Electronics Association (CEA) research. Accessing Internet content has never been easier, faster or more pervasive.
  • There are more content options available through Internet delivery than ever before, and the list continues to grow. At the 2015 CES in January, Dish debuted Sling TV, a new service that lets subscribers receive streaming in-demand cable networks such as ESPN and AMC and CNN alongside several other cable networks — all without a full cable or satellite subscription. HBO and CBS have also announced on-demand streaming services. Digitization makes service offerings infinitely divisible and customizable, creating an endless and unbounded array of “a la carte” streaming options that bundle and unbundle content offerings to build personalized content options.
  • Forty percent of households subscribe to streaming video services, and the number of households with Internet-enabled TV has nearly doubled in the past year. All at once, we have grown increasingly comfortable with Internet-delivered content.
  • As a result of both more pervasive broadband connectivity and greater streaming choices, we are spending more time watching Internet-delivered content. While the bulk of our time spent watching content today remains via traditional paid television services, the Web’s share of the total continues to grow rapidly. The number of hours people spend watching content on YouTube each month is up 50 percent year over year. The time spent consuming Web-delivered content is another not-so-distant waypoint in this transformation.
  • We have more screens than ever before. We average 5.6 screens per household in the U.S., creating multipronged viewing experiences at home and on the go. All told, there are nearly 900 million shiny black screens in the U.S. waiting to be turned on. This is the perfect environment for Internet-delivered content — many screens, many diverse users — all wanting something different.

These factors and others suggest that the transition from linear television to more flexible wireless options has passed the tipping point. With many questions yet to be answered, we can be sure of one thing: The fight for the Iron Throne will be televised. And recorded. And downloaded. And streamed.

Shawn DuBravac is chief economist of the Consumer Electronics Association and the author of “Digital Destiny: How the New Age of Data Will Transform the Way We Live, Work, and Communicate.” Follow him on Twitter @shawndubravac.

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