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No, the world isn’t ending for the cable and satellite industry

The cable and satellite industry is in flux at the moment. Streaming video platforms such as Netflix, Amazon Prime and Now TV continue to explode in popularity.

The cable and satellite industry is in flux at the moment. Streaming video platforms such as Netflix, Amazon Prime and Now TV continue to explode in popularity. Nielsen says that TV viewing in the US is down by 3 per cent from last year, while video viewing on internet, smartphone, and multimedia devices combined is up by 45 per cent. And if you type ‘broadcast industry dying’ into Google, you’ll get more than 600,000 articles on the topic.

Many have summarised that the cable and satellite industry is suffering the death of a thousand cord-cutters. But is it that simple? The outcry was big when social media and music streaming services disrupted the traditional publishing and music industries, prompting both to negotiate the digital shift. The result? They are re-emerging more successful than ever.

Based on what happened in these industries, we can make some educated guesses about the future of video consumption, too. And things may not be as bleak for the traditional players as you would think. But first, let’s do a quick recap, starting with the news businesses.

Google still hasn’t killed the newspapers
Publications like The Guardian have increased their traffic numbers (now attracting over a 120 million uniques a month) and are fuelling an innovative paid membership strategy. And not being happy with the 30 per cent surcharge of Apple’s App Store, The Guardian is also launching a new advertising alliance with CNN International, the Financial Times, Reuters and The Economist.

All of these news outlets recognise that they can’t compete with social networks in terms of aggregation, so they make sure to offer informed perspectives, strong arguments and compelling entertainment that readers can’t find anywhere else. The Guardian even won the Pulitzer prize last year. These “companies formerly known as newspapers” are reinventing the way news is delivered by creating data-driven interactive set pieces (The New York Times’s ‘Best and Worst Places to Grow Up’) and encouraging offline participation (The Guardian’s ambitious line-up of masterclasses for its members).

They’re not out of the woods yet, but any new media start-up would envy their traffic and monthly active user numbers they are achieving. According to the Pew Research Center, the majority of The New York Times’s paid circulation now comes from digital sources (around 1.4 million readers).

Pirates still haven’t killed the music industry
First, Steve Jobs convinced the world it was OK to pay for digital content through the launch of iTunes. Then, Spotify convinced us it was OK to pay for access to digital content without even owning it.

Sony Music CEO Edgar Berger echoes this positive trend towards paid streaming subscriptions (which now account for over 23 per cent of the global digital market) as well as where the music business is heading to in general. He recently told Music Week: “The current trajectory is that the industry will inevitably grow, there’s no doubt that paid subscription will be the predominant format in the market, the one that consumers will gravitate towards.”

So yes, the music and revenue streams are both shifting course, but you have to credit the industry with partnering with technology firms to create ways of accessing music that are actually easier (and far less risky) than stealing it. And for providing simple, monthly subscription plans. That wasn’t always the case.

What is happening to poor old cable and satellite television?
Nielsen recently suggested that 93 per cent of US cable subscribers who also have an over-the-top subscription video on-demand service are actually more likely to drop the latter than they are cable. “Cable may have a little more staying power than it’s actually being given credit for recently,” said Glenn Enoch, Nielsen’s senior vice president of audience insights.

And while streaming viewing figures are on the rise, media analyst Steve Sternberg recently noted that 91 per cent of all video viewing is still on traditional TV (and more than 90 per cent of that is live viewing). Even among the under-25 crowd, more than 80 per cent of viewing is still on traditional television.

Sternberg said: “Another way to look at it is that viewers spend nearly 5 1/2 hours per day watching television, compared to about 25 minutes per day watching video on the internet and smartphones combined.”

Television viewers aren’t going anywhere — they’re just demanding different digital services, and different ways of paying for the content they actually want to watch. The old 500-channel bundle, for instance, is going away. Saying goodbye to it might be painful in the short term (most subscribers only watch nine percent of what’s available anyway), but it will eventually unlock more smart, focused content bundles and revenue opportunities for the companies that already have a direct pipe into our living room and a huge infrastructure that enables them to sell us additional products and services.

We’re in the midst of a broad global shift from a manufacturing economy where companies sold products to strangers in isolated transactions, to a subscription-based economy where companies engage in ongoing relationships with their customers. And the media industry has been at this game for a very long time.

As it turns out, cable and satellite are still pretty sticky, and I think the digital shift is just the beginning of a new golden age for this industry.

By Tamsyn Attiwell, VP global services, Zuora