Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Will Increasingly Popular 'TV Everywhere' Apps Push Netflix Out of the Picture?

By

Netflix and other VOD services may have lured customers away from cable companies, but now those cable conglomerates are fighting back.

PrintPRINT
Cable companies are about as popular these days as Congress, and it's no secret that video-on-demand providers such as Netflix (NASDAQ:NFLX) have given angry customers a chance to vote with their feet. Last year, cable television lost nearly 2 million subscribers. Many of them fled to competing services from DirecTV (NASDAQ:DTV) or AT&T (NYSE:T), but some chose to cut their cords altogether -- 2013 marked the first year in which the paid TV industry actually shrank. Meanwhile, Netflix added 6 million new customers in the United States alone.
 
Now the cable companies are fighting back, and they're doing it on the back of a platform they call "TV Everywhere." The goal is to keep subscribers happy by letting them access cable content wherever they might be. In practice, this means lots and lots of mobile apps. Some of those apps are big, such as Comcast's (NASDAQ:CMCSA) Xfinity TV Go, which now offers 53 channels. Others are small, such as the Comedy Central app released last week, and BET NOW, unveiled the week before that.
 
These apps provide live and on-demand content, free for those with a cable TV subscription. If you're a sports fan, there's a good chance that you're already familiar with this model. Last month, NBC offered live Web streaming of the Sochi Olympics to those with cable accounts. March Madness games can be viewed online at NCAA.com -- but again, this service is only available through participating TV providers.
 
TV Everywhere has provided common ground not just for cable companies, but for an entire industry threatened by the phenomenon of cord-cutting. That includes DirecTV and AT&T, as well as networks such as CBS (NYSE:CBS), all of whom depend upon the fees brought in by subscriptions. "Anytime there is a conversation with a network group and [its] pay TV distributor, TV Everywhere is part of the equation," said Marty Roberts, an executive at Comcast's video-serving subsidiary thePlatform, during an interview last December.
 
This diverse constituency has turned out to be something of a liability, as each company pursues its own vision of what TV Everywhere should be. The networks want channel-specific apps such as WatchESPN, which builds its brands and offers a closer relationship with viewers. However, the FCC says that the typical basic cable package comes with 80 channels, so it's unlikely that this approach will work for all (or even most) of them.
 
On the other hand, Time Warner Cable (NYSE:TWC) would prefer the convenience and simplicity of a single app that offers a slew of channels like TWC TV. Judging by the app's two-star rating on the iTunes store, customers haven't found it all that convenient. Reviewers have been kinder toward the Dish Network (NASDAQ:DISH) and Verizon (NYSE:VZ) apps, but one comes away with the impression that this is an industry still struggling to emulate the user experience offered by Netflix.
 
Nevertheless, it's telling that the networks have joined hands with the cable providers. They're all middlemen when it comes to providing content, but they're rich middlemen. NPD expects the average cable television bill to reach $123 by next year, and that kind of money pays for a lot of TV shows. Content costs are also rising: Viewers are watching more original content these days, and Walt Disney Company (NYSE:DIS) wasn't the only media giant to notice "a shift in hours ... to higher-cost original scripted programming" last year. Whether or not we want to pay for it, this programming isn't cheap. Disney's cable expenses were more than $8 billion in 2013, and $7.99/month Netflix subscriptions are never going to float a ship that big. No surprise that, when push comes to shove, the networks would throw their weight behind the tried-and-true cable model.
 
This combined effort may be starting to pay off. Market research firm GfK finds that TV Everywhere "is having a notable and growing impact" in reducing customer churn, and that it has enjoyed a particularly favorable reception amongst those who also subscribe to video-on-demand services like Netflix. TV Everywhere is also making solid progress in terms of traffic: According to Roberts, thePlatform was serving 150 million videos per month as of December, up 50% since last spring.
 
The most troubling aspect for Netflix has to be the wealth of apps, such as USA NOW, offering on-demand content. TV Everywhere allows networks to serve ads and obtain data on their viewers while avoiding the homogenization of a video-on-demand supermarket. (Breaking Bad originally aired on AMC, but how many Netflix viewers are aware of that?) It may be just a matter of time before more of this content is kept in-house and Netflix finds itself stuck with whatever's left.
 
It's unlikely that consumers will be thrilled about any of this. We have an expensive habit and we don't want to admit it; in this age of digital media, it's all too easy to live in denial about the true cost of things. Commercials and cable fees don't poll well, and they never will. That doesn't mean they're going anywhere.

Also see:

Apple: Are Chinese Buyers Holding Out for a Big-Screen iPhone 6?

Amazon's Fire TV Is Great News -- for Netflix and Hulu Plus

Why Facebook Doesn't Like Sushi Porn Anymore

< Previous
  • 1
Next >
No positions in stocks mentioned.
PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE