The Future of Television
Here's What's Next
It may now feel like something from a bygone era, but there was a time not long ago when cable television was king. With a range of film, sports, music and other channels, cable’s offerings dwarfed that of broadcast television, bringing a galaxy of new programming, sensibilities and creativity to the small screen, quickly elevating the entertainment expectations of consumers.
Fast-forward to today, when cable television has been pushed to the far end of broadcasting’s evolutionary timeline by over-the-top (OTT) and the ascent of platforms such as free ad-supported TV (FAST). According to Kantar, 18% of U.S. households in the fourth quarter of 2021 used at least one FAST service, more than double a year prior. Although we can’t be certain what tomorrow holds, we can draw some conclusions from past evolutionary steps while taking a closer look at the future of television.
Are there any lessons to be learned, any cautionary signs that should be heeded, based on the fall of cable? After all, the format was wildly popular and continued to grow for decades, even as video cassette recorders became the home entertainment rage and Blockbuster Video stores began popping up on every corner. Cable continued to prosper even after VHS tapes gave way to DVDs.
The tipping point came when Netflix began transitioning its subscriber model from shipping discs to streaming video (or SVOD). Amazon Prime, Hulu and many others soon followed. As SVOD providers gradually improved their technology stacks, smoothing out video buffering and building more elegant user interfaces, viewers began “cutting the cord” from their cable operators. With SVOD platforms offering on-demand capabilities and so much content for comparatively little price, many viewers enamored by the variety, flexibility and cost of streaming suddenly had little use for cable.
Interestingly, though, as more OTT providers have entered the market and streaming has fragmented into a number of distinct categories, the industry has learned a key fact: Many viewers are still interested in linear television. The format itself has its appeal among consumers, who prefer the option of a free, ad-supported platform. As it turns out, viewers didn’t hate cable. They just couldn’t stand paying $84 a month for it.
So what does it all mean for the future of television? We’re already seeing the next steps in its evolution, with video on demand and terrestrial television stealing pages from each other’s playbooks. We’re even seeing platforms and content providers joining forces.. The merger of WarnerMedia and Discovery was recently completed, and hot on its heels is the new company’s plans to combine its Discovery Plus and HBO Max apps into one service.
There’s undoubtedly more where that came from. In order to maximize market share, streaming providers are likely to begin offering multiple service tiers (premium, standard SVOD and AVOD or FAST, for example). Viewers can be expected to bundle services, using one or two SVOD services and 2-3 AVODs. After initially splintering, tinkering and learning the new demands of the market, the industry should begin gradually consolidating in a way that ultimately may resemble, ironically, a sort of cable 2.0.
At the end of the day, entertainment consumers want the best combination of variety, choice and affordability. The winners of the streaming wars will be those that develop the most dynamic and robust package that gives it to them.