Commentary

TV Services Explode: Is Free TV Over?

So, are you enjoying a ton more TV these days? I hope so — because you’re going to be paying more for it, and soon.

Television was for many years paid for by advertising. This meant that TV was “free” —but you had to tolerate the endless interruptions of commercials aimed to turn your attention into commerce.

Today, TV is a paid offering, and the balkanization of programming means that you can’t expect to pay for one service.

Let’s take a look at one family's TV budget. I’ll use mine as an example.

First, broadband access and WiFi, because lots of TV comes over the broadband pipe. I’ve got a good deal with Spectrum, with unlimited broadband for $60 a month. On top of that, we use the Cloud TV service to get basic cable, and Cloud DVR to be able to record and pause shows.  So all in all Spectrum is $100 a month / $1,200 a year.

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Then there’s program services: Netflix, Amazon Prime, Disney Plus, Apple TV+, HBO, and the occasional VOD offering.

All in all,  another $70 a month (though various discounts and first-year-free offerings reduce that a bunch)/$840 a year. That’s more than $2,000 a year for TV shows that used to be free.

So what will consumers do when the bills all come in?

I’m sure of a few things. First, the idea of paying $1.99 a show for the VOD stream of a program from one of the services that you don’t subscribe to is going to go the way of the horse and buggy: too much cost for too little programming.

Second, I don’t think families are going to need to pay for four services a month (or five, if you count the NBC or CBS series that are VOD on the horizon.)

So, instead, we’re going to see AVOD: advertiser-sponsored video-on-demand shows, but with the pause and fast-forward features shut off. Sound familiar? It should, the math and the user experience will be very much like how TV was back before TiVo came along.

Adding Netflix, Hulu, Amazon Prime Video, Disney+, Apple TV+, Peacock and more into the mix will lead to a raging battle.

Of course, it all began with Netflix. As red envelopes became streamed content and acquired shows shifted to Netflix Originals, the leader in the shift to digital was always head of the pack. Now, some of Netflix’s most popular acquired shows are slipping away. In 2018 the two most-streamed shows were “Friends” and “The Office.” But Warner Media’s HBO Max and NBC’s Peacock are grabbing them back.

Netflix’s most powerful new franchise is the content  it controls. The two top originals, “Stranger Things” and “Black Mirror,” drive new subscribers and fuel renewals. Approximately 13% of ex-Netflix users signed up again to watch the third season of “Stranger Things,”  and Netflix says 40.7 million accounts had watched “Stranger Things 3” since its debut July 4, according to The Verge.

And there are more options on the horizon for web video consumers.

Quibi, the brainchild of former Disney and DreamWorks chief Jeffrey Katzenberg, is set to launch next spring. It’s a mobile-first platform focused on original content delivered in 10-minute chunks. The idea is that mobile viewers like to consume shorter-form content.  Quibi has confirmed more than 30 different projects so far, with plans to spend just over $1 billion for content during its first year. Yup, a billion -- that’s a lot of A-list talent.

And if you want to hold on to the old model of completely free TV, then you should check out Pluto TV, just purchased by Viacom. Pluto offers over 100 channels of live TV with stations including Comedy Central, CNN, NBC News, Nick, VH1 MTV, and the platform will be adding several CBS stations. Sound familiar? It’s a blast from the past, but the ads can’t be skipped, so you have to trade attention for free content.

There’s also a little-known service called Locast that is pulling over-the-air signals off  broadcast towers and offering them up to cord-cutters for free. In July, ABC, CBS, Fox, and NBC sued to shut down Locast, saying it did not have the rights to stream local over-the-air TV.

Locast responded publicly, “Locast is an independent, nonprofit organization that provides a public service retransmitting free over-the-air broadcasts.  Its activities are expressly permitted under the Copyright Act.”

And as a sample of just how blurred the lines are getting, movie fans are now able to rent and buy films at home from AMC Theaters On Demand, after their theatrical runs — mimicking iTunes, Amazon, Vudu and other VOD providers. Sign up and perks include free refills on large popcorns — but only in theaters. At home, you need to make your own popcorn, at least for now.

And let’s not forget YouTube, which has branched out beyond music videos and bloggers with a cable-like product over broadband, and also has a section of free movies with ads.

There are more and more options to stream, watch, and store TV programs. But are the new economic models fueling more diverse content and more quality? That remains to be seen.

11 comments about "TV Services Explode: Is Free TV Over?".
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  1. Ed Papazian from Media Dynamics Inc, December 2, 2019 at 1:32 p.m.

    Steven, for most consumers deciding what to pay for TV/video programming, is a household or family decision, not just an individual person's choice. This means that husbands ---or boy friends will have to consider what wives--- or girl friends ---want and both will need to heed the desires of their children or teens when such are present. So even if the "guy" wants ESPN and a regional sports network-- or two or three of them--- plus the History,A&E and Discovery channels plus CNN and The Weather Channel, plus Comedy Central and TBS, TNT,  Discovery and Netflix as well as Comcast---as its local station news is a favorite, "She" may prefer Disney + for herself and the kids, plus Lifetime, MSNBC, Bravo , The Food Channel and The Learning Channel as add-ons. And then there are the kids who may beg for Nikelodeon and who knows what else. In no time you've got 20-25 channels to buy from 4-5 sources --not one. And then CBS or somebody else will launch another appealing service with still more on the way. So what do you do? You probably don't buy them all---but you wind up with many more than you, yourself, wanted. And you pay.

    Meanwhile, back at the "pay TV" ranch, the cable systems and satellite distributors have finally adapted and are offering much greater selectivity in their bundles. Instead of losing all of their subscribers ---as the doom and gloom soothsayers keep predicting, the "pay TV" folks retain about half of their subs and these, by the way, tend to be rather heavy TV users---not just in primetime but in all dayparts---they love "Judge Judy, "The Real Houswives Of Podunk", Dr. Phil", "The Price Is Right" and "The Today Show" and those late night network chat and joke shows, and network news, and they miss classics like "the Jerry Springer Show" etc Also, the "Pay TV" services have pared down the number of channels they carry---and, consequently, their prices are no longer shooting upward as fast as before. So maybe, you have to consider a return to the older but cheaper way to get your daily TV fix after all---the "pay TV" menu, while somewhat reduced from its glory days, still has enough for all members of your household---does't it?

  2. Ed Papazian from Media Dynamics Inc, December 2, 2019 at 1:32 p.m.

    Steven, for most consumers deciding what to pay for TV/video programming, is a household or family decision, not just an individual person's choice. This means that husbands ---or boy friends will have to consider what wives--- or girl friends ---want and both will need to heed the desires of their children or teens when such are present. So even if the "guy" wants ESPN and a regional sports network-- or two or three of them--- plus the History,A&E and Discovery channels plus CNN and The Weather Channel, plus Comedy Central and TBS, TNT,  Discovery and Netflix as well as Comcast---as its local station news is a favorite, "She" may prefer Disney + for herself and the kids, plus Lifetime, MSNBC, Bravo , The Food Channel and The Learning Channel as add-ons. And then there are the kids who may beg for Nikelodeon and who knows what else. In no time you've got 20-25 channels to buy from 4-5 sources --not one. And then CBS or somebody else will launch another appealing service with still more on the way. So what do you do? You probably don't buy them all---but you wind up with many more than you, yourself, wanted. And you pay.

    Meanwhile, back at the "pay TV" ranch, the cable systems and satellite distributors have finally adapted and are offering much greater selectivity in their bundles. Instead of losing all of their subscribers ---as the doom and gloom soothsayers keep predicting, the "pay TV" folks retain about half of their subs and these, by the way, tend to be rather heavy TV users---not just in primetime but in all dayparts---they love "Judge Judy, "The Real Houswives Of Podunk", Dr. Phil", "The Price Is Right" and "The Today Show" and those late night network chat and joke shows, and network news, and they miss classics like "the Jerry Springer Show" etc Also, the "Pay TV" services have pared down the number of channels they carry---and, consequently, their prices are no longer shooting upward as fast as before. So maybe, you have to consider a return to the older but cheaper way to get your daily TV fix after all---the "pay TV" menu, while somewhat reduced from its glory days, still has enough for all members of your household---does't it?

  3. Douglas Ferguson from College of Charleston, December 2, 2019 at 2:44 p.m.

    Tubi is free. Crackle is free. Pluto is free. And broadcast is free. Here's a good list (although Tubi is missing):  https://parade.com/943656/alexandra-hurtado/free-streaming-services-sites-tv-movie/

  4. Douglas Ferguson from College of Charleston, December 2, 2019 at 2:46 p.m.

    I was wrong: Tubi is #3 on the list I shared. 

  5. Paula Lynn from Who Else Unlimited, December 2, 2019 at 4:01 p.m.

    You mention that paying per episode is too expensive. Both Comcast and Verizon charge from $1.99 on up per episode for a show that is more than 5 weeks that is already paid for when you pay your entire bill for On Demand. It is another factor in the entertainment choice explosion and believe another reason what is the straw that forces people to make choices outside "packages".

  6. Maarten Albarda from Flock Associates (USA), December 2, 2019 at 4:13 p.m.

    Didn't I just write on the very same topic/sentiment... Great minds and all that: https://www.mediapost.com/publications/article/343414/the-fallacy-of-the-streaming-wars.html

  7. Craig Jaffe from Baruch College, Zicklin School of Business, December 2, 2019 at 7:54 p.m.

    Hi Steven, it's always prudent to exercise caution when quoting data from other sources. Your article states, "Netflix says 40.7 million accounts had watched 'Stranger Things 3' since its debut July 4." Since your article was published today, I assume you wrote the article yesterday, which means the quote is implying 40.7 million accounts watched that particular Netflix program from July 4th until now (yesterday's date, December 1st). This would be far from an impressive statistic. If we do the calculations based on this period of time, the math suggests Netflix's "top" original achieved a zero rating (rounded) or about 0.09% during this time period, assuming we use the normal definition of the rating metric and assume the best case scenario in which all 40.7 million Netflix accounts watched every episode and every minute of every episode one time. I believe Netflix's original press release suggested 40.7 million accounts watched the program within the first four days of when Netflix made it available in its library for consumers to possibly access. Based on this smaller time frame of four days, the statistic is more impressive, but in the grand scheme of things, it actually isn't dramatically impressive either. Lastly, I would caution against quoting statistics sourced from a business who has a vested interest in those statistics. It is in Netflix's interest to demonstrate to Wall Street (its investors) and advertisers (due to product placement in Netflix programming) that it has high numbers. Media companies are not the authoritative source on how they themselves perform. For example, if you want to know how many people watch CBS, you don't get that information from CBS; if you want to know how many people use Facebook, you don't get that information from Facebook; if you want to know how many people read the NYTimes, you don't get that information from the NYTimes; etc. To prove this point, I once joked to my students I would let them grade their own midterm exams. This got a big laugh, because the students are not the authoritative source on the correct information; it would also be a conflict of interest as the students have a vested interest in how they perform; and I would never allow this. If Netflix wants to quote numbers, that's fine. But I would suggest you also use another source that is an objective, third-party, non-biased, independent source that has its data collection techniques audited to assure all businesses that will be using the resultant data, that the data is valid and reliable.

  8. steve Rosenbaum from NYC media lab replied, December 2, 2019 at 8:01 p.m.

    Sorry Craig, point taken -  “Stranger Things” season 3 was watched by 64 million member households, Netflix said in the Q3 letter to shareholders. - from Variety: 


    "The company previously boasted that 40.7 million accounts watched the show in the first four days of its July 4 debut, marking its biggest-ever audience for a movie or TV series in a four-day window."

  9. Craig Jaffe from Baruch College, Zicklin School of Business, December 2, 2019 at 9:14 p.m.

    Thank you very much for the clarification, Steven. It makes me wonder why Netflix felt compelled to originally issue a statement after four days. Why not after the first day, or first week, or first month? Four days seems arbitrary. I could be wrong, but I imagine Netflix's internal data analysts had previously evaluated the performances of some of their other programs, and possibly noticed a meaningful drop-off in viewership four days after the typical Netflix program is placed in its library for consumers to access. While "64 million member households" is certainly better than 40.7 million, the 64 million is based on a much longer period of time (nearly a full quarter), which points to an approximate -90% decline, or attrition rate, in the viewership of this "top" Netflix original program, based on the normal definition of the rating metric used by the industry. If Netflix's top original fare is attriting -90%, I believe they should be concerned, should begin establishing norms, and should change their communications strategy.

  10. Darrin Stephens from McMann & Tate, December 3, 2019 at 9:39 a.m.

    An entire article about the loss of free TV that doesn't mention an antenna.

    I think Betteridge's law applies to the headline.

  11. steve Rosenbaum from NYC media lab replied, December 3, 2019 at 10:38 a.m.

    Ah, some clarity. I've written about OTA a lot, and when I cut cable years ago was Antenna Only for a few years.

    https://www.forbes.com/sites/stevenrosenbaum/2012/11/12/the-cost-of-cutting-cable/#13a2f6673c25

    But then, the NYC broadcasters moved from the empire state building to 1 world trade, and my service OTA declined. should have included that and a link. Thanks for the head up.

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