Login is restricted to DCN Publisher Members. If you are a DCN Member and don't have an account, register here.

Digital Content Next


InContext / An inside look at the business of digital content

Forget cable 2.0. Streaming video is TV 3.0

September 1, 2022 | By Matthew Keys – Independent Media Reporter @matthewkeyslive

A few weeks ago, analytics firm Nielsen Research earned some splashy headlines after it issued a press release reporting that television viewers streamed more content than they watched on cable TV for the first time.

To clarify, Nielsen’s own research put streaming services ahead of traditional cable products for the first time since it began collecting data on those practices. And, arguably, some of its data is debatable, since it rolled services like Hulu with Live TV and YouTube TV into both the “streaming” and “cable” categories (cable networks are core to both products).

Also, while Nielsen’s own data has streaming at a slight edge over cable, columnist David Bloom notes that the measurement firm doesn’t typically gather data from devices like computers or game consoles where streaming services are also offered. More importantly, as  Bloom pointed out, the Nielsen report probably reflects a consumer trend that has been taking place for several years.

Still, the survey has fueled comparisons between streaming services and cable television — and not always for the better. Bloomberg media correspondent Lucas Shaw recently wrote that price hikes and advertising made it so that “the streaming business is starting to look like cable TV from 10 years ago.” The idea is that price hikes and advertising are turning the streaming industry into “Cable 2.0“.

It is difficult to argue with that logic from a price perspective: Netflix, Hulu, Amazon Prime, Disney Plus are among the streaming services that have implemented one or more price increases since their debut. (Netflix has raised subscription fees on average at least once per 1.5 years since 2014). But to focus squarely on price misses the bigger picture: Streaming has liberated good entertainment from the wall jack and the television set. And, in doing so, has made it cheaper and more-accessible than at any point in television history.

Streaming is not too far removed from cable’s history

Accessibility has spurred technological advances throughout the history of domestic television: Broadcast TV emerged about a century ago as a way to add moving pictures to radio programs. What is commonly known as cable TV started out as community antenna television. Regions in remote parts of the United States banded together to build a giant antenna capable of receiving distant broadcast signals, then ran coaxial cable from the antenna to homes. Customers paid a few dollars to maintain the system and had access to most, if not all, of the main three networks plus a handful of independent stations.

In the mid-1970s, television mogul Ted Turner figured he could make a few dollars more from the advertising he ran on his Atlanta station, WTBS (Channel 17), if he uplinked it to satellite. From there, cable systems could receive the station and distribute it to their viewers. The idea took off, and soon stations like WGN (Channel 9, Chicago) and WOR-TV (Channel 9, New York) jockeyed for satellite space so they, too, could get national distribution on cable.

Years later, another television pioneer, John Malone, saw that cable was a much-bigger business opportunity than anyone else seemed to realize. His Tele-Communications Incorporated (TCI) grew to become one of the dominant-players in the industry between the late 1970s and the mid-1990s. Malone and TCI bankrolled some of the first cable-only networks around (including Turner’s own CNN when it faced bankruptcy). And many of those cable networks are still around. (TCI is currently owned by Comcast.)

Both phases of television limited viewers to their TV sets. It wasn’t until streaming came along that video was finally liberated from the living room cable jack.

Streaming is not an extension of cable — it’s an evolution of television

Jason Cohen spends a lot of time thinking about this 30,000-foot view of the domestic television industry. In 2019, he left his job as a media portfolio manager for a Wall Street firm to launch MyBundle.TV, an online marketplace for streaming services. He thinks people who focus on streaming services being the new cable — “Cable 2.0” — are missing the bigger picture. He believes that “TV 1.0 was broadcast, TV 2.0 was cable and TV 3.0 is streaming. It’s taking the closed, set-top box model of TV 2.0 and opening up the marketplace.”

There are still pain points for streaming services, with price being an obvious one. It’s true that over the last few years, most major media companies have raised their subscription fees as they invest billions of dollars in original content production earmarked for their own direct-to-consumer services.

And the marketplace is reacting to rate increases by diversifying their subscription tiers. For years, Hulu has offered customers the choice of buying their streaming service at a budget price if they are willing to tolerate ads. They also have the option of paying more money if they want a commercial-free experience. Since then, other streaming services like HBO Max, Discovery Plus, Comcast’s Peacock and Paramount Plus have taken the same approach. Disney and Netflix have confirmed plans to do the same in the near future.

Cohen thinks price diversification will help a streaming service appeal to a broad group of customers at any given time: “If a household wants to save money, they can watch tons of free, ad-supported streaming services. If a household has money to burn, they can spend a ton of money on ad-free tiers of streaming services and never watch another commercial again. And if it’s something in-between — which is probably most of the country — it’s subscribing to a handful of services at one point, and then switching them out during the year.”

TV 3.0 is a chaotic landscape that will stabilize with time

There is some data to suggest that consumers are growing more comfortable with the idea of switching services on a whim. According to the analytics firm Antenna, around one in five households dropped three or more subscription services in the two years ending this June. In 2020, the number was closer to one in 20 households within the same two-year stretch.

One reason why subscribers might be switching away is the sheer volume of streaming services. Consumers are also finding their favorite TV shows and movies shuttled between them. Netflix, for instance, has lost several of its top comedy shows: “Friends” moved to HBO Max, then “The Office” moved to Peacock. Disney has slowly pulled titles from Netflix, too, as it seeks to reclaim movies for its own Disney Plus streaming service.

The revolving door of content hits on another pain point for streaming: In the TV 3.0 world, finding content can be a confusing experience. Cohen believes that platforms are starting to address this by building technology that makes it easier to find shows and movies across a number of different services and devices, and recommendation engines should become better and easier to use over time.

As Cohen describes the situation, “Where is it easiest to discover shows? It’s probably your phone. Where’s the best place to watch TV? It’s probably on the TV.”

So, how do manufacturers and platforms respond to that? By building a bridge between the two — whether that’s Vizio Account, or a Samsung app, or a Roku app, or something else. As he points out, “every TV maker and every operating system is trying to figure out the best way to help consumers find content on their platform.”

That said, Cohen acknowledges the streaming world is something of a mess right now. Mergers and acquisitions mean the owner of one streaming service (like CBS All Access or Discovery Plus) suddenly becomes the owner-operator of another (Pluto TV, HBO Max). And that, of course, means figuring out a long-term strategy for both. (If you’re Paramount Global, each streaming service lives in its own ecosystem. If you’re Warner Bros Discovery, you announce plans to get rid of two flagship streaming services and start anew).

It is a particularly chaotic time to be a sports fan, with sports rights to popular franchises like the National Football League and Major League Baseball split between broadcast, cable and streaming. Major League Baseball games, for example, are carried on regional cable sports networks in many markets, except for a few games that are exclusive to either NBC (and Peacock) or Apple TV Plus. This means that baseball fans this season might have to subscribe to cable and make an account with Peacock and Apple just to follow their home team.

Adding to the confusion is the lack of a single sign-on feature that allows customers to have one username and password that covers every service they want access to. Some companies have experimented with offering a feature that comes close to this: Roku, Apple and Amazon have streaming marketplaces baked within their own platforms. And Vizio recently announced Vizio Account, which seeks to replicate that experience. (Google is also reportedly exploring this idea.)

Cohen’s own MyBundle.TV is a platform-agnostic marketplace that asks streamers about the channels and programming they want to receive, then directs them to streaming services where they can find it. Eventually, customers will be able to manage their subscriptions from within the MyBundle.TV platform. Currently, MyBundle.TV only offers this feature with Sling TV, but other partners are in the works.

Malone, the cable magnate who pioneered TV 2.0, thinks bundles will eventually be the winning ticket for TV 3.0. He also believes there will be further consolidation between media companies as their war with each other intensifies.

Cohen backs the idea of a single platform where customers can start and stop streaming services at will — he left his Wall Street job to build that kind of product. But he’s not convinced that streaming services have to appeal to everyone with everything. He thinks niche streaming services can be successful on their own merit: “Streaming services don’t need to be everything for everyone. There are options that appeal to every household.”

As content becomes more fractured, Cohen said consumers need to resist the itch to sign up for every streaming service that is out there. The idea that customers had to have access to everything hearkens back to the days of TV 1.0 and 2.0 — when popular shows were watched in real-time on just a handful of channels, whether they were on broadcast TV or cable. That experience resulted in appointment-viewing — people had to watch shows at a certain time (later, they could record them for delayed viewing) — and also helped spur water cooler conversations and pop culture moments.

The TV 3.0 landscape is different. Streaming, for the most part, doesn’t require appointment viewing, because people can — and do — watch things on their own time and at their own pace. Cohen says things like streaming watch parties are offering solutions to people who still want television viewing to be a social experience. But it appears to be a technology that few people want. What customers do want is access to everything. But those days are long gone.

Streaming still has its challenges. However, the technology will improve over time and consumers will eventually come around to the idea that the convenience and price of streaming is worth the sacrifice of not having access to everything. That, coupled with the flexibility of starting and stopping services as well as the ability to watch programming across any number of devices, means streaming should not be reduced to Cable 2.0. It is an evolutionary leap in a revolutionary entertainment experience. It’s TV 3.0.

Liked this article?

Subscribe to the InContext newsletter to get insights like this delivered to your inbox every week.