The Rise of Streaming Media Over Cable

Now is a great time to be an online content creator. Streaming media is changing the face of video entertainment: people are turning to streaming video platforms instead of cable. Consumers are no longer willing to pay for hundreds of channels they don’t watch. They’d rather subscribe to on-demand programs like Netflix or watch free content on YouTube and Vimeo. 67% of Americans use a streaming service while only 61% still have home cable connected. The trend has some analysts predicting that cable TV as we know it is coming to an end.

Entertainment On Demand 

In the beginning, streaming video content was enormously expensive in terms of usage costs. The average consumer couldn’t afford a computer powerful enough to receive streaming video or a telephone line that could handle that much data. The first major event to be live-streamed – a Rolling Stones concert in 1994 – was sent to only 200 computers.

Technology improved, but for a long time watching anything online was a hassle. Sites that wanted to share video had to host it on their own servers and code players themselves. In addition, video was uploaded in a wide variety of formats, most only playable by their own player.

Three things things brought online video into the mainstream. The first was broadband cable. Suddenly content was available at a reasonable speed, fast enough for non-techies to be interested. While in 1995 only 0.04% of the world had internet, after the advent of broadband subscriptions surged. More people were online than ever before, spiraling up towards the 47% estimated to be online today.

The next medium-changing event was the 2005 launch of YouTube. Anyone could upload a video to YouTube which could be linked or embedded, no need to download a separate player as long as the user had Flash installed. (The company has since shifted to HTML5.) Google bought the company in 2006, and by 2007 YouTube’s new Partner Program was letting creators share profits from their online content.

Netflix’s streaming service was the third driver of the online video explosion. It wasn’t the world’s first streaming video platform- that honor goes to Hong Kong company iTV- but it was revolutionary. Instead of waiting for DVDs to arrive in the mail, subscribers could stream movies and TV shows more reliably than on any other platform of the time. “Streaming” became synonymous with “watching”, and the world has never been the same since.

Streaming pulls ahead 

Networks originally viewed streaming media as a substitute for DVD rental. Instead, consumers were more excited by short format video. They responded strongly to creator-owned YouTube content and jumped at the chance to watch entire series of television in marathon sessions. Slowly but surely, streaming video began to do what was once unthinkable: threaten the dominance of cable TV.

Few experts doubt the lasting appeal of streaming video anymore. The average person spends 167 minutes on TV daily versus 149 minutes online, and the gap is shrinking fast. Among teenagers streaming has already won; Netflix and YouTube use in this demographic passed cable TV in 2016. By 2019 all demographics are predicted to prefer streaming media over cable.

The undeniable edge 

Online media’s popularity is easy to understand. Viewing habits have changed, and the traditional “prime time” viewing slots aren’t as convenient anymore. Consumers prefer the freedom to decide what they want to watch and when. They’re also increasingly impatient with the mandatory commercials inserted into broadcast TV.

Content that can be streamed also creates social opportunities. Friends can stream YouTube and Facebook Live together from around the world. Netflix serves as both a low-demand dating activity and a group bonding experience (for example, pre-season catch-up marathons before a show returns from hiatus).

Besides the convenience of streaming media, the creative quality is often superior to TV. Cable and broadcast TV are heavily influenced by pressure from advertisers, studio heads, and other corporate types. While Netflix does have some of the same restrictions, created-produced content is bound only by the hosting platform’s terms and conditions. It has more variety, and viewers see it as fresher and more authentic. Cable by nature is too processed to compete with that kind of connection.

Cutting the cable 

Experts have good reason to predict the demise of cable. Last year, 1.5 million Americans dropped their cable service. Two thirds of those who still have cable say they only keep it because it’s bundled with their internet and phone.

While cable was once the heart of home entertainment, it’s fallen well behind streaming media. Only 36% of the 13-24 year old demographic say they couldn’t imagine living without cable. In contrast, 67% couldn’t give up YouTube.

Despite the drop in usage (or maybe because of it) cable companies are still raising subscription prices. The average cable bill was $103 dollars in 2016, an increase of 4% over the previous year. Even for consumers who pay for streaming platforms like Netflix or YouTube Red, focusing on streaming media can save around $600 a year.

The future 

Streaming companies are now taking over traditional cable properties like sports. Amazon Prime recently announced they are streaming 10 NFL games next season . Facebook will be partnering with Univision to stream Mexican league football, and other platforms are in talks to acquire sports broadcast rights as well.

YouTube hosts are now intentionally creating shows for the platform, not just using it as a way to attract the attention of larger networks.

Some companies are trying to bridge the gap between streaming media and cable. Sling and Charter Communications both offer a cable-like streaming service based in the cloud. YouTube itself has also launched a subscription package for live TV.

Meanwhile, cable networks and providers are already diversifying in search of more profitable markets. Most have released channel apps that offer their content before it’s available on Hulu or Netflix. These apps also feature sneak previews and interviews with channel celebrities.

Some networks are contracting shows by online creators in hopes that fans will follow them to cable (or at least slow the exodus). Adam Conover was invited to bring his YouTube hit Adam Ruins Everything to TruTv, and celebrated foodie Hannah Hart has a new show on the Food Network.

The more pragmatic cable providers are looking for ways to use their infrastructure once the bulk of video consumption shifts to the cloud. Many have found success with licensing their lines to home security systems.

Electronics manufacturers are having the easiest time adjusting to the new media order. Wi-fi enabled “Smart TVs” and streaming devices (Roku, Amazon Fire and Apple TV) are growing wildly in popularity, especially as platforms have improved their video quality to suit high-definition screens.

Parting thoughts 

All signs point to the end of cable TV within the next few decades. How much will change – for example, whether providers will still release shows episodically or adopt the Netflix “season drop” method – remains to be seen. One thing is sure: it’s a good time to be an online content creator!


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