This could be the year that members of the cord-cutting generation finally put an end to cable TV as we know it. While there are already two primary live streaming TV alternatives that everybody knows about – Sling TV and PlayStation Vue – there are also a handful of options that either launched at the end of last year or are planning to launch by mid-2017, including DirecTV Now, Hulu Live, YouTube TV and VIDGO.
In short, there are going to be a lot more ways to watch live streaming TV than ever before in 2017. So it’s only fair to ask: How will live streaming TV be different from cable?
That’s a great question to ask, since it helps us deconstruct the classic cable TV experience into its component parts: content, distribution, and functionality. The live streaming TV services are splitting apart each of these components, re-thinking them, and then recombining them in new ways to make pricing more affordable for customers.
Of course, as you’ll see below, you also have to keep in mind the various trade-offs that you might have to make as a live streaming TV customer. You didn’t really think that you’d get the same number of channels as cable and even more functionality at a cheaper price, did you?
Factor #1: Content
Let’s start with content, because that’s the first place you’ll notice a difference in the live streaming TV experience from the cable TV experience. Whereas you typically get 200+ channels with a cable TV provider, you might only get 30 to 50 channels with the core offering of an alternative streaming TV provider (as is the case with Sling TV and PlayStation Vue).
The key, then, is to figure out how many of the “best” content channels you’re getting. As long as you’re getting a few of the major networks, a major sports network like ESPN and a major news network like CNN, services like Sling TV figure you probably won’t care that you’re not getting 150 channels you wouldn’t watch anyway. That was the reason you decided to become a cord-cutter in the first place, right?
The new trend is to offer live streaming TV customers a “skinny bundle” that includes all the most popular channels. Then, customers can customize that bundle with all kinds of add-on packages or single premium networks. For example, you might get the Sling TV Orange package (30 channels), and then pay extra to get HBO. The number of possible permutations is really mind-boggling, and you have to pay careful attention that all those channel add-ons don’t start inflating the core price you’ve agreed to pay.
Factor #2: Distribution
You might wonder what “distribution” means, and it’s a really good term to know. It’s also a very important question to ask. Distribution is a very internet-centric term, but it just refers to how the content is delivered to you. As you might have guessed, the live streaming TV providers are using the Internet to provide all that great content, so in a certain way, they are dependent on the big cable providers who built all those nice, fat broadband pipes into your living room.
But here’s where things get really interesting – once you have Internet in your home, it means you can create a Wi-Fi network in your home, and that means – you guessed it! – that you can take your TV content with you wherever you go in your home. And you can watch it on just about any digital device – a tablet, a smartphone or a laptop computer. If you can get Internet service, and if you can download an app, you can watch the TV content. This really expands the pie in terms of the number of potential consumers.
Factor #3: Functionality
The fundamental premise of a cable TV experience is that you can do just about anything with your TV once you have cable hooked up – you can watch live, linear TV; you can watch content On Demand; and you can record shows to your DVR. This is actually a very powerful argument, so the live streaming TV services have had to re-think this to make up for any deficiencies.
And this is what they came up with – a plan to wean you off your TV and get you to embrace the idea of watching TV on your tablet or other digital device. That way, they don’t need to worry about set-top boxes, equipment, or even if you have a TV. Instead of a physical DVR, you now have a “cloud DVR”! In fact, you may not even need an official “internet account” – if you’re a college student, you might just live off free Wi-Fi in your dorm and the local Starbucks, for example.
Who owns the customer now?
We’ve just looked at three very important factors – content, distribution and functionality. The live streaming TV services have all taken slightly different approaches to these, all in an attempt to offer a superior value proposition to users. That’s fantastic for the customer, of course, because more competition means more choice.
But here’s the strange thing – it’s not really clear who “owns the customer” these days. Think about it – with a cable TV provider, you signed up for a cable contract lasting one, two or three years. The company “owned” you. If you wanted to get any content that wasn’t live, linear TV, you essentially had to ask permission from them and then pay them.
But the live streaming TV service providers did away with contracts. You can quit and walk away at any time. So, a customer could theoretically sign up for Sling TV, stay for a month or two, quit, sign up for some bargain or special rate from DirecTV Now, quit, and then sign up for YouTube TV or PlayStation Vue or…
Well, you get the idea. Customer loyalty is really a thing of the past. The companies who “own” the customer these days are the most popular content companies – like HBO. It used to be the case that, in order to get HBO, you HAD to be a cable customer. No questions asked. But HBO essentially unbundled itself from cable. Now, it’s an a la carte option on the great streaming TV buffet table. You can get HBO with Sling TV, for example, and that’s got to make the big cable TV companies extremely upset.
You know why, right? Yes, of course, it’s because customers can kick cable TV companies to the curb now if they can get their HBO or ESPN elsewhere. So that might be the biggest change to the live, linear TV experience: a fundamental change in how customers think about all the great TV content they’re consuming.
The new paradigm is a massive “internet cloud” where every single piece of TV content resides. It’s just a matter of finding the right way to stream all that content to your device, and now there is a very robust set of options. Sling TV and PlayStation Vue were just the beginning of what has become a major new trend in how people watch live TV.