New 5G Services Could Accelerate Cord Cutting in 2019

The rate of consumers dropping their cable and satellite TV packages hit the highest level ever in the fourth quarter of 2017, while Internet TV subscribership grew strongly.

According to analysts at Moffett Nathanson Research, the total number of pay-TV subscribers in Q4 dropped 3.4% from a year earlier, the highest rate of decline since the trend of cord cutting emerged in 2010, with almost 500,000 customers leaving in the fourth quarter alone, that leaves the industry with about 83 million cable households.

These calculations don’t include the growing number of households that never subscribed to a pay TV service in the first place, AKA: “Cord Nevers”. Over half of cord nevers are millennials, ages 18 to 34, but just 35 percent of cord cutters are millennials.

The cable bundle has become increasingly unappealing as consumers have turned to more flexible and less expensive video offerings, disrupting the traditional cable TV model, like Netflix and Hulu that feature traditional TV and movie formats, to shorter programming from YouTube, Facebook, and Snapchat.

But offsetting the shift is the growing number of people signing up for packages of TV channels delivered over the Internet by services like Google’s YouTube TV, Dish Network’s Sling TV and AT&T’s DirecTV Now. At about $20 to $50 per month, the online offerings are considerably cheaper than the average cable TV bundle.

Later this year Verizon, T-Mobile, and AT&T will all be launching 5G networks creating real competition among home internet services. Instead of having one or two options to choose from, consumers will have 5 or more broadband services options, driving a new wave of cord-cutting as consumers continue to unbundle internet services from their local cable company.

Sling TV: A Big Step Forward for OTT


Not to be confused with the Sling Box, Sling TV is a new over-the-top television service from Dish Network that allows consumers to stream a limited number of cable channels without a cable subscription.

Hundreds of thousands of people have already preregistered for Sling TV since it was announced in January at the Consumer Electronics Show, Sling TV is offering a handful of networks, led by ESPN, for $20 a month. Other networks on the service include Food Network, HGTV, Travel Channel, CNN, TNT, TBS, Disney Channel and ABC Family.

Sling TV is aimed at “cord-nevers” who want to stream nets including ESPN and Food Network for $20 a month. With its launch, the service is also rolling out a series of apps for mobile phones, tablets, and streaming devices that hook into a subscriber’s TV.

For those who want more choices, particularly for children’s content or news, Sling TV offers bonus packs of channels for $5 a month in those categories. It also hopes to have an expanded tier of sports channels at the same price, which it says is coming soon.

The introduction of Sling TV is the beginning of the TV businesses reaction to the popularity of streaming services, led by Netflix. The number of pay-TV subscribers has been slowly shrinking and there is concern that the availability of more streaming services will accelerate the decline.

Sling TV isn’t all about streaming live TV, the service will have videos from Maker Studios in addition to live TV channels from traditional TV networks. Finally, Sling TV will also offer up a selection of video-on-demand movies and TV shows that users can purchase.

To get users watching the service, Sling TV has introduced mobile apps for the iPhone, iPad, and Android phones and tablets. It will also have apps for Amazon Fire TV, the Amazon Fire TV Stick, and the Roku 3, to allow viewers to stream live cable networks directly to their TVs.

Sling TV still isn’t my dream OTT service. It makes you buy a limited bundle of preset live channels, but does not include the broadcast networks or options to add additional channels.

The good news is that Sling TV, unlike traditional cable TV bundles, has no contracts and no upfront installation costs. Subscribers can cancel at any time, and the company is offering a one-week free trial for those who’d like to try it out before committing to it.

Analyst expects Netflix to reach 100 million global subs by 2018

Stifel Nicolaus analyst Scott Devitt expects Netflix Inc.‘s international subscribers to surpass its domestic subscribers within the next five to six years.

Devitt, who upgraded Netflix to “buy” from “hold” with a $380 price target, believes the company will have about 100 million global subscribers by 2018.

“While 4Q may continue to be bumpy, we believe 2015 will see resumed growth from launches in Western Europe in mid-September 2014, particularly from large countries such as France, Germany, and Switzerland, as well upcoming launches,” the analyst said in a Jan. 13 research note.

The analyst expects the company to expand further in Western Europe, with Spain, Portugal, and Italy being the next likely targets

Original Programming, The New Internet Video Land Grab

This week, Hulu announced a slate of 10 exclusive shows coming to its platform this summer—one of the most aggressive moves yet in a land grab that is taking place among the pioneers of Internet video. Netflix has now green-lighted five premium series, and earlier this month, Amazon unveiled Amazon Studios, its first foray into original video. At YouTube, Google is plowing $100 million into launching 100 channels, with the goal of creating more content than there are hours in the day to watch.

In the hypercompetitive community of TV creation, where fortunes are made and programs are killed without mercy, online is where the action is. “The phrase that I keep hearing a lot is that it’s the Wild West,” says J.D. Walsh, the showrunner behind the original Hulu series, Battleground. “And I think that it is the Wild West. What that connotes to me is that nobody really knows what the rules are, what’s going to be stable, or who is going to [emerge as] the leaders. But even within the Wild West, you did have some major cities—and that’s what you’re seeing with these platforms.”

Hulu, Netflix, Amazon, and YouTube are all taking a unique approach to original programming on the Web. Their differing bets—on such questions as quantity, polish, advertising versus subscriptions, nudity, and more—provide a hint of what the future of “television” will resemble.

Hulu, which is jointly owned by the legacy television networks, is coming to resemble a broad-interest network with catholic tastes. Of the 10 series announced this week, three are wholly original to Hulu, and they run the gamut: there’s Spoilers, a kind of movie club hosted by Kevin Smith (Clerks); Up to Speed, a travelogue by Richard Linklater (Dazed and Confused); and We Got Next, a “bro-mantic comedy” about a pickup basketball clique. The other seven titles, for which Hulu bought exclusive streaming rights, involve everything from teen pregnancy to the British clergy to a faux-gritty mockumentary set on an elementary-school playground.

Andy Forssell, the executive in charge of content—and a $500 million annual budget—says he has no idea how many titles Hulu will come to produce in the coming years. “We’re quality-gated,” he said in a recent interview. “There’s no quota that I want to go hit. We don’t have a set number of hours to fill, like a lot of traditional networks do—that’s actually an advantage I want to jealously guard.”

“A year ago, it was difficult to have people audition for our show because they just thought, ‘Oh, it’s just going to be on the Internet.’ Now we don’t have that problem anymore.”

Jason Kilar, the chief executive officer of U.S. online video content provider Hulu. (Kyodo / Landov)

One thing Hulu’s original titles will never depict, though, is nudity. That’s in part because a significant portion of the company’s revenue comes from advertising.

That provides an easy point of comparison with Netflix, which has sought to reposition itself as the HBO of the Internet, home to premium dramas and comedies that viewers are used to finding on pay-tier cable channels. That includes the promise of gore—horror auteur Eli Roth is developing a werewolf series titled Hemlock Grove—and, when appropriate, boobs. In April, at an event in Las Vegas that offered a first look at Netflix’s original programs, much was made of the shower scenes to come in Orange Is the New Black, a comedy set in a women’s prison.

The first Netflix series, Lilyhammer, premiered in the United States in February, and four more will come in 2013, including the $100 million drama House of Cards, with a pilot directed by David Fincher (The Social Network) and Kevin Spacey in the lead role. While Hulu plans to release episodes of its programs week by week, as the broadcast and cable networks do, Netflix will make whole seasons available to stream at once, a competitive advantage in courting the most artistically demanding writers and directors.

Amazon is far behind Hulu and Netflix’s leads, having only just unveiled its Amazon Studios division in early May. But its model is intriguingly disruptive, and of a piece with the company’s dotcom and retail roots. While Hulu and Netflix are hobnobbing with Morgan Spurlock and Jenji Kohan, Amazon is crowd-sourcing its production process, soliciting pilot scripts from the general public.

After a 45-day option period, Amazon will offer chosen artists $10,000; if the series makes it to the Amazon Instant Video service, creators get $55,000 and up to 5 percent of the proceeds from toy and T-shirt sales. And for now, Amazon is taking the opposite of Hulu’s kitchen-sink approach to genre, asking for pitches specifically in comedy and children’s programming.

Then there’s YouTube, with the deep pockets of Google and a deeper commitment to the messy, anything-goes world of user-generated Web video. Its 100 subsidized channels will feature sports talk, family fare, self-help, and virtually everything else users expect of the YouTube jungle. These episodes will be Web-sized—a couple of minutes each, instead of the familiar 22-minute blocks that will be found on Amazon—and creators will get a cut of Google’s advertising.

Why are these online video giants all rushing into original content? A number of factors play a role. With more homes gaining access to broadband Internet—and higher quality feeds—the audience for streaming is reaching a critical mass. Viewers have more choices about where to watch video, too—Friday Night Lights is available on Amazon Instant, Netflix, Hulu, Apple’s iTunes, and other services. As these libraries get more similar, the streaming companies have only two options for differentiating themselves: either pay through the nose for exclusive deals, or put that money toward great original programming.

The talent is ready. “A year ago, it was difficult to have people audition for our show because they just thought, ‘Oh, it’s just going to be on the Internet,’” says Battleground’s Walsh. “Now we don’t have that problem anymore.”