Legacy Pay-Tv: The Classic Case of Evolve or Die
Christa Leith-LLM MSc MBA BA Prosci ADKAR? .
Snr. Mgr. Regulatory and Policy Affairs Telecommunications Services of Trinidad & Tobago Limited (TSTT)
Movies, sitcoms, realities…shows of any kind continue to be an important part of our entertainment menus. People will continue to watch shows and the advent of the digital age has not changed this. Who we get these shows from, what we indulge in, where and when we consume from the entertainment smorgasbord before us, has however evolved in keeping with our technological developments.
The proliferation of data access and the associated rise of Over the Top (OTT) distribution has facilitated a cord cutting/shifting/avoiding trend that has become commonplace. This silent revolution is no secret to anyone in the video industry and NBC, ABC and CBS are giving way to the likes of former bookstore Amazon, YouTube, and Netflix.
In the world of traditional legacy pay-TV, cable, direct broadcast satellite and telecommunication (telco) multichannel subscriptions providers are seeing a slow dwindling of their subscriber base. According to US analysts, the “fat” bundles of legacy pay-TV are being replaced by the “skinny” bundles provided over the internet and more and more by the “mesomorph” bundles from YouTube and fuboTV with their innovative interfaces and TV everywhere functionality. The primary reasons, according to analysts are clear:
1. High costs
Cord cutters, whose average age is 43, gave the primary reason for divorcing themselves from the traditional TV and in favor of internet-TV services, as high prices and constantly increasing fees. In addition, the so-called “Cord-Nevers” – meaning those consumers who never choose to subscribe to traditional cable or satellite TV in the first place – is growing for these reasons as well.
2. Generational Shift
Some people have never paid for a cable or satellite connection and simply never will. With over half of cord nevers being millennials, ages 18 to 34, the attraction of being able to watch content when, where and however one wants over multiple devices, has a staggering appeal.
Despite the quickening pace of cord separation/avoidance, pay-TV continues to have a wide audience as there is still some allegiance to the legacy TV model. The only segment set to grow in the pay-TV market is expected to be the one comprising viewers ages 55 and older. All other age groups, especially the Gen Zs however will continue to decline at a faster rate than this expected growth which potentially means big trouble for the Legacy pay-TV provider.
People will continue to pursue online, mobile and non-linear viewing and as they do this at cheaper rates, with access to just what they need to satisfy their viewing palate, subscribers here will continue to increase. For how long? No one really knows however, there is no sign of this trend coming to an end. As a result, companies providing traditional TV may need to start restructuring their business models to align with viewer preference and behavior if they are to remain relevant, survive and thrive.
Senior Global Executive | Strategy Consulting | TechCo Transformation | Growth Architect
6 年Excellent article Christa. I will add some secondary reasons: 1) Commercial-free viewing. 2) No need to Pay for unwanted channels. 3) TV on demand (Watch what I want when I want). 4) TV "anywhere" (Once a Broadband (BB) connection is available). 5) One time fee (box pays for itself in a few months). 6) BB cost cheaper than TV subscription. 7) Movies/TV Show quality (1080P and 720P). 8) Cinema is too expensive. Sadly piracy is here to stay, remember Napster circa 1999. I certainly agree that operators need to quickly formulate strategies to address declining revenues resulting from customers cutting the cord, as somehow everyone loves the word free, even when all that glitters is not gold.