Beyond Big Cable: Millennial Viewers Ditch Network Packages and opt for Greater Value with Streaming Services

roku tv

For as long as we can remember there has existed a well-established monopoly whereby consumers have little or often no choice between high-priced cable packages offered by a small handful of national providers.  Broadbandnow reports that five major companies provide service to nearly 250 million customers in the US. And Comcast dominates the market with a staggering 113 million customers in 40 states.  The resulting market is one of ever-increasing prices, preposterous service fees, and abysmal customer service, all at the expense of the consumer.

Fortunately, if current media consumer trends are any indication, none of that matters anymore.

“Cord-Cutting Is Accelerating!” proclaimed the Wall Street Journal this month, citing that, by 2018, 21% of U.S. Households won’t pay for traditional TV.  The feature includes a foreboding line graph with a plummeting projection of cable subscription rates in the years ahead.

And honestly – who can blame consumers for jumping the sinking ship of traditional TV when a streaming cruiseliner comes sailing by?

To set the stage for this sea change of service subscriptions, let’s look at the market as it stands today.

A FEW PRICING FACTS FROM BIG CABLE

The National Average for a Cable Package in the US:

Starter packages run $50-$65/mo while premium packages run $68-$127/mo.

Add to that $6-$8 per mo. in fees for your HDTV cable boxes.  An HD DVR receiver will cost you another $10-$16 per month.  Service to additional rooms or outlets range from $7-$10 each.  And if you want the premium channels you’ll have to shell out an additional $10-$15 per channel per month.

That quickly adds up to a whole lot of money for a passive-feed of non-interactive, commercial-loaded content, which is precisely what Thomas Pecoraro of Western NY thought in 2003 when he was shelling out $130 a month for cable and HD premium channels with Dish Network.  “I really wasn’t using 90% of the content,” Tom explained.  In 2006 his growing dissatisfaction would inspire him to explore the then brand-new concept of streaming media from AOL/Time Warner’s In2TV.com.  

In2TV was an ad-supported stream of content from the Warner Brothers archives.  Tom quickly realized that he could patch an S-video cable from his laptop to his CRT television and enjoy this web-sourced content on his television set.  “The early 5-14Mb/s broadband was not a reliable connection,” noted Tom.  “You could play what you want when you wanted it, but there was heavy pixelization and frame drop abound.”

That same year, WB.com began offering similar free retro cartoons and sitcoms.  It was the early days of streaming, and networks were testing the technology with archival content that they couldn’t otherwise capitalize upon at the time.  “What a lot of consumers don’t realize,” Tom  noted, “is that Time Warner’s IN2TV streaming service was the precursor to Netflix.”

In 2007, Netflix added streaming to their DVD rental subscription service, and by 2008, they made a deal with Starz to expand their catalog.  “They had Give Me a Break, Charles in Charge and a variety of other programs,” said Tom.  “It was exciting to revisit my childhood shows on demand.”

The Next Step: Roku

“As soon as Roku was launched in 2008 I bought the very first model,” said Tom.  “It made it so much easier to access media content.”  At the time he had both Netflix’s DVD and streaming packages for a total of $16 a month.  With the ease of accessibility Roku offered, Tom quickly cancelled the DVD portion of his subscription and kept the streaming service for $8 a month.

“The beauty of Roku,” Tom explained, “was that it was an affordable, one-time investment.”   That same year Tom purchased a Google TV, but the service faced challenges.  “It had a keyboard interface and a browser to search various networks for streamable content.  Many offered programs at the time, but when the networks realized that Google was accessing and distributing their media for free, they unanimously decided to block Google TVs from receiving their media.”  

“Roku approached access rights differently.  They steered clear of network content.  Roku made deals with providers, podcasts, and with Archive.org to ensure that there were no issues with the content.  That’s a big contributor to why Roku came out on top.”

Hulu Enters the Arena

Hulu was the next step in an experiment of networks streaming their own content on their own terms.  It began as a web-based portal of content where networks could supply old and new content without worry of maintaining multiple websites while simultaneously introducing a new avenue of content distribution, so they let anyone sign up to watch the content for free.  

But as new streaming boxes and “media PCs” premiered on the market, each pointing to online content (such as Google TV and Boxee Box), the networks became frightened at their loss of control of distribution.  They began blocking IPs for Hulu and other non-computer devices.  Hulu created “Hulu Plus” for Roku, smart TVs, DVD/Blu-ray players and game systems (and any other market offering competitor Netflix’s content).  

“Individuals like me who watched the web version of Hulu saw Hulu Plus as a joke and a scam,” noted Tom.  “Why pay for Hulu Plus when you would see ads running on their service?  After years of this nonsense and the fear of SlingTV, HBO and others entering the ring, Hulu Plus rebranded Hulu for both the web version and the streaming boxes introducing a new $12 ad-free tier as well as a premium tier for movies from the usual suspects – much like the market of the early years of cable.”

Dish Network – Too Little Too Late

In early 2015, Dish Network launched their SlingTV service (not to be confused with the SlingBox).  The basic package offers 19 channels for $20.  Marketed as “The Best of Live TV,” SlingTV features general interest content like food, sports, and travel.  And, like its competitors, SlingTV also offers premium tiers for children’s programming, sports, and movies for an additional fee.  But it’s passive live streaming, just like regular TV but distributed over the internet.  The basic $20 package gives you access on only a single device, and it’s riddled with commercials.  There’s really no reason to explore this option unless you’re satisfied with passive content.  “SlingTV exists solely for members of the older generation who wish to break free of their cable contracts but want the familiarity of traditional television,” Tom observed.  

Amazon Prime – Great Value For Its Price Point

To compete with Netflix, Amazon in the early days offered a simple rental plan of $4 a movie.  They later launched Prime with free streaming of older video content.  If you order products with any regularity from Amazon then Prime already pays for itself in the money you save on shipping.  Today’s annual rate of $99 is still a great value for their library of content.

Adding It All Up – Streaming vs Traditional Cable

Tom has tried every major streaming service available in his area since the advent of streaming in the early 2000s.  Today he has subscriptions to several content providers, making his monthly bill an excellent case study for a comparison of old services vs new.

Tom kept Hulu for $8 a month because they offer Japanese and 70s sci-fi content that he would otherwise spend far more to purchase outright.  

He also utilizes the free ad-supported Crackle service on Roku which offers a variety of movies, TV shows, and anime.  “It’s a one-stop shop for great content,” said Tom.

An avid fan of Japanese programming, Tom also pays for 3 premium anime services via Roku – Funamation ($8), CrunchyRoll ($6), and Anime Network (also $6).  Together, these services provide a wealth of content both old and new from Japan.

Tom also enjoys content from numerous other providers catering to niche interests.  Services such as:

  • TwitCh – for Gaming
  • <>.TV diamondclub.TV – a community of fan-based content and a video podcast channel
  • Frogpants – similar to diamondclub
  • TuneIn – free radio
  • Livestream – for live broadcasts
  • IHeartRadio – free radio and music stations
  • Archive.org (an unofficial third-party channel) for their unparalleled library of public domain content
  • Presto – the best of HBO and Showtime for a low monthly rate
  • the Google Play Store
  • and PBS

The one-time purchase of the Roku and annual $99 Amazon Prime fees aside, Tom’s total monthly cost for all this content is $35.  All of the media is on-demand and much of it commercial-free.  Compared to his $130 Dish Network cable contract, cutting the cord was a no-brainer.

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Thomas Pecoraro – Cable-free since 2013

A Nationwide Trend

In Oct 2013 Statista.com reported that 43% of users age 18-36 opted for Netflix while 46% utilized traditional cable packages.  I asked Tom whether he believed there will still be a market for cable in 10 years’ time.

“It’s not a black or white Netflix question,” he answered. “It depends on whose stats you read.  But in 1979 networks were frightened about the new concept of cable television.  It’s the same scare now.  They’ve always been slow to change and the technology shows no sign of slowing down for them.”

I’m curious, as I know my readers span a variety of ages and demographics.  Have you cut the cord as well?  To my younger readers – did you grow up with an entirely post-cable experience?

And what is your media center interface of choice?  Do you prefer XBMC?  Plex.tv?  Or Roku?

Whatever you use, it is wonderful to see consumers empowered by a new era of media technology.

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