In a long expected announcement, Showtime has just launched the ability to stream their content via the internet without a pay TV subscription.
While streaming video content via the internet is nothing new, what is new is the ability to stream live (as in real-time broadcast) content without paying for the channel via an existing cable or satellite TV contract. The many 3rd party streaming services like Hulu or Netflix typically only stream older content, while the apps developed by the networks themselves like HBOGO require a verified cable account. If you want to see the latest episode of Homeland at the same time as the rest of human society your only legal option was to fork over cash every month to a pay TV provider.
The Showtime announcement is a big milestone in the ongoing transformation of the the video content landscape.
The incredible cash flow and profitability of the large cable companies – Comcast alone had $17 billion in revenue in Q1 2015 – has directly fueled the investment in high quality video content by the networks themselves. If networks increasingly sell their content direct to consumers over the internet the cable operators are in a tough spot, and the money they have to spend on quality programming via syndication fees will be reduced. While we can expect cable companies to try to slow the move to streaming, and even start to invest in becoming content creators themselves, it’s hard to see how they can maintain their current scale.
The shift to direct streaming will also impact advertising, as the current byzantine process of buying television ads may no longer work with the new landscape of hundreds of direct to consumer content creators and streamers. It would be easy to see how digital innovators like Google could step into the place formally occupied by the upfronts and the cable companies, making it easier to buy ads at scale in a distributed content ecosystem.
Despite the hype, the cable-cutting trend has not meaningfully impacted cable TV subscriber numbers. While the number of cable TV subscribes is no longer growing, it’s also not meaningfully shrinking. If more content creators head down the road Showtime is taking that may change.