Does the Future of TV Lie Beyond Cable?

Apple’s announcement last week of their upgraded TV platform was, perhaps, a bit of an anti-climatic surprise. With the broadcast and home entertainment industries both figuratively holding their breath about a possible Apple TV service and channel bundle, this incremental improvement on the existing Apple TV box was important, but not the show for which the crowd yearned.

While Apple works to sort out the complexity of rights licensing, no easy task according to the NY Times, the marketplace is continuing to evolve, and quickly. By the time Apple launches (perhaps in Q1 or Q2 of 2016?) will consumers still anchor their entertainment choices with a thick bundle of (mostly unwatched) TV channels, supplemented by niche offerings or individual OTT services? Or will the scene be ideal for the debut of an internet-delivered TV service?

Cable subscribers are on the decline, but according to one study, the decline is not due to cord-cutting, as it would be if consumers were abandoning their cable for OTT exclusivity.

“Changes in the dynamics of the pay-TV industry are not driven just by those exiting the category, but also those coming into the category…Historically, consumers have gone in and out of the pay-TV category, primarily for economic reasons. While the rate of those leaving is actually similar to a decade ago, those who are entering or reentering the market has decreased over time…

Courtesy of rstreet.org

Courtesy of rstreet.org

Translation? It used to be that the churn (dropping a cable subscription and subsequently re-upping) was pretty regular and predictable. But now, fewer consumers engaging with cable when they entering the housing market (starting their own households) or reentering (after a move).

Younger consumers are not beginning a life-long relationship with Big Cable, nor do they seem interested in one. As Giant blogger Reyna Flores explains in Why Millennials Love OTT, part one of our Ask a Millennial series, the young adult demographic tends to value choice and control in their entertainment options, two qualities not strongly associated with these media megaliths.

We millennials love content AND flexibility, and will obtain it with whatever screen we have to work with (or charger we may have handy). Companies which want to capitalize on those forces must be willing to meet us, metaphorically, when and where we want to enjoy your content.

While Apple may have been stymied by negotiations, the delay may prove to be fortuitous. Consumers may be more open and accepting, in 2016, of an IPTV delivered bundle which may truly replace their fat, expensive cable bundles. With broadband moving from luxury to must-have utility, the stage tomorrow will actually be more welcoming than today. Some interesting stats: 50% of US broadband households use OTT, while 22% of cable households have an OTT service.

Courtesy: The Economist

Courtesy: The Economist

With OTT acceptance and market penetration rising, and cable penetration falling, a centralized, easy-to-use offering from a trusted brand delivered via broadband could be just the ticket to launch consumers into an app-based future with a plentitude of content, flexibility and control. While the old model may have been to over sell consumers ( Most consumers receive 190 channels, but actually only watch 17), the new model, the app-based, IPTV-delivered model as the potential to return the balance of power to consumers.

The future of TV does lie beyond cable. Why? Flexibility and control and a rising consumer demographic which values those things.

Was the new Apple TV service delayed? Or are the geniuses in Cupertino just biding their time, waiting for consumers to be ready. Remember that Apple debuted one of the firest tablet computers, the Newton, to little success or acceptance, but then revolutionized the industry with the iPad decades later.

Clever like a fox, those Apple folk. Keep an eye out.