OTT Starts Rocking The Cable Boat

It’s interesting to see the domino effect of technological and consumer change. As OTT gains a real foothold with a wider public, we’re beginning to see what happens when there's a shift in where people are getting media.

Increasingly, it is not coming from not cable/satellite. It's hardly a stampede, but there is a sizable bunch of early adopters using new over-the-top services. 

A new bearish report from MoffettNathanson Research says cable networks are in for tough times in 2017 from an advertising standpoint. More significantly, pure-play outlets, like Scripps, AMC and Discovery may be out of position on emerging OTT services.

Unlike the network groups and Time Warner, those standalones are in trouble. ABC, NBC, CBS, Fox and Time Warner have live sports, news and decades of programming history behind them. Formidable as they are, those pure-play cable groups do not. MoffettNathanson has “sell” ratings all three, warning of “fundamental challenges that lie ahead.”



Without sports, news or event programming, the report implies, they’ll have a tough time getting or keeping footing on OTT carriers.

Unlike the fat days of cable, when new networks popped up seemingly weekly, the new mode is skinny, for which networks — really popular and well known networks, like Food, HGTV and TLC — are just a lot of baggage.

At the same time, the pay TV business, where all of those pure-play networks have prospered, is declining — not exactly imperceptibly. MoffettNathanson says the pay TV business ended 2016 declining at the rate of 1.7%, “its fastest rate of decline ever.”

Yet some of those networks have had  healthy advertising performances that seem, in some cases, to be falling now. “We remain worried that cable network viewership will erode more rapidly than consensus estimates for long-tail and non-live networks,” today’s research paper says.

Moffett Nathanson earlier noted some of the cord-cutting reports out there were a little too panicky. Going forward, it warns: “This time the headlines will be justified--albeit with some nuance.”

That seems to suggest that more cable networks will find ways onto the OTT platforms. Big players like Time Warner and Viacom are missing from the new YouTube TV service. And now that there are four established streamers, the likelihood is that Hulu should be able to creating a new streaming service that takes advantage of the changing pay and OTT landscape.

Affiliate fees — what cable operators pay networks per subscriber — seems to be under intense pressure.
3 comments about "OTT Starts Rocking The Cable Boat".
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  1. Ed Papazian from Media Dynamics Inc, March 6, 2017 at 2:36 p.m.

    Actually, if the new YouTube streaming "skinny" package which includes all five broadcast TV networks and their owned cable channels---but not Time Warner, Viacom and Discovery----is successful, it poses a huge threat to the "stand alone" cable program services but not to those owned by the TV networks---Bravo, USA, SyFy, Fox News Channel, ESPN, etc. If a significant percentage of the country goes in for YouTube's deal and "cuts the cord"---they will be dropping all of the standalones, while TV network and network owned cable ratings rise thanks to the reduced number of channels competing for viewers. Naturally, higher ratings mean higher ad revenues for the TV networks, but, left out in the cold, the standalones will suffer major coverage losses and that will cost them ad dollars. They had better come up with an attractive streaming counter to the YouTube deal---just in case it works.

  2. brian ring from ring digital llc, March 6, 2017 at 2:44 p.m.

    Once again, and I say this every quarter, but analysts are missing the story here. Which is that there are TWO stories now. MVPDs that have invested in world-class TV UX are beating the OTT threat. Example? Comcast X1 / X1 Cloud DVR / Xfinity / X1 Sports App. Comcast added subscribers last quarter & last year. Other MVPDs need to get rears in gear - but the good news is that if they do, they will succeed in reviving their fortunes.

  3. Moe Green from Swig Media , March 7, 2017 at 8:28 a.m.

    Another Bundled Package which is no different from what you have at home now. TV and cable have been churning out the same CRAP for years. It's time to break the mold of the 70's programming. Youtube's deal is no different. You can put a silk hat or a bow tie on a pig. It's still a pig. A great example of what to do. Look at CNN and TBS. They are pumping out original new fresh content that is cool to watch. The opposite is look at Scripps. The same boring cooking shows for years. The same 20 people for the last 20 years. I'd rather watch paint dry or grass grow. It's not just about "Cutting the Cord" We need new formats. Has to appeal to ages 6-60. 

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