http://www.marketwatch.com/story/has-the-cable-cutting-revolution-finally-arrived-2015-07-13
Has the cable-cutting revolution finally arrived?
Comcast is testing a new television streaming service for $15 a month. Will
this lead to more people cutting the cable cord or is it just a sign that cable
companies are acknowledging that they need to offer more services to
cord-cutters?
On Sunday, Comcast announced that the new broadcast television service, Stream,
will be available to Xfinity Internet customers in Boston at the end of the
summer. The service, which will also have HBO, will then be rolled out in
Chicago and Seattle “with plans to make it available everywhere in our
footprint by early 2016.” Consumers can sign up online. Critically, people will
still need a Comcast Xfinity Internet plan, which starts at around $70 a month
for Internet and local television channels (although there are limited-time
promotions starting at $45 a month).
Has the TV cable-cutting revolution finally arrived? “No,” says Dan Rayburn, a
principal analyst with business consulting firm Frost & Sullivan. “For
starters, it’s only going to roll out in beta this summer, in limited
locations, with the goal of going live next year. But a lot can happen in that
time. Remember how much credit the media gave Intel for their OnCue service
which never even launched?” Intel sold that media business to Verizon
Communications last year, effectively putting an end to its ambitions to start
a cloud-based Internet TV service.
“Until we know what this service looks like, which channels it has, at what
quality, supported on what devices and how many streams you can do at once,
it’s too early to judge this at all,” Rayburn says. “Plus, this won’t have
sports channels, which as we know, is a big driver of cable TV.” (In a
statement posted online, Comcast said Stream will include thousands of
on-demand movies and shows to watch at home or away, plus a cloud DVR service.
“It’s unlike anything we’ve ever offered: no extra device or additional
equipment required or even a TV,” it said. It’s an online-only service, but
people could also connect their computer to a TV screen.
That said, there are many more ways to stream video content than there were a
few years ago. In March, Apple Inc. cut the price for the Apple TV streaming
box to $69 from $99. The most basic Roku device to stream content to your TV
costs $50, Google Inc.’s Chromecast costs $35 and Amazon’s Fire TV retails at
$99 with the slightly more basic Fire TV Stick at $40. Also last March, Sony
Corp. rolled out its new Internet TV service, PlayStation Vue, in New York,
Philadelphia and Chicago and, as of last month, Los Angeles and San Francisco.
The amount of time American households spend watching live television has
fallen over the last couple of years. In the last quarter of 2014, adults spent
4 hours, 51 minutes watching live TV, down from 5 hours, 10 minutes two years
before, according to a report by market research group Nielsen. Video streaming
services, such as Netflix, have overtaken live TV in popularity, according to a
report released in April by consulting firm Deloitte. Those latter households
use devices to watch TV, “nearly 50 minutes more than a typical household with
a TV,” it added.
And yet the cable television industry hasn't lost more than 1% of cable TV
subscribers in any one quarter, Rayburn says. Online services, he believes, are
a complement rather than disrupter to cable, which may explain why Comcast is
now entering the fray. Netflix has more than 40 million subscribers in the
U.S., paying $9 a month, versus HBO’s 30 million-plus customers in the U.S.
paying $15 a month. Most Netflix customers want to watch live television and
also have cable, Rayburn says. Time Warner Cable has around 11 million video
subscribers and Comcast has around 22 million.
