The Transition From the Cable Bundle to Streaming is Messy, and Full of Opportunity

Changing Consumer Behavior

Most of the pandemic driven impacts on consumer behavior have dissipated.  We are no longer running out of toilet paper, flour or puppies. Conversely, some other new consumer behaviors show no sign they will revert to the old way.  Home delivery of any meal is the new normal, and livestreaming video has jumped to another level all together.  

This year, 163 million people in the US will watch live video streamed on the internet, an increase of 29% when compared to 126 million people in the pre-pandemic year 2019 (eMarketer).  

Driving this change in the US is sports.  In China, it is mostly driven by live streaming shopping.  Even if the TikTok of online shopping doesn’t make it across the Pacific Ocean, the paid video live streaming industry is projected to grow at 15% per year through 2027 (Grand View Research).  

Millions of Users Have Transitioned to Streaming

The pace at which online paid sports programming is growing cannot be understood without considering the end of the cable bundle.  Ten years, 100 million households received 100% of their video content from one source, their cable TV provider. Now that video can be streamed on any device at any time, only 60 million households have cable TV at all and subscriber count is projected to fall below 50 million in the next few years. (Insider Intelligence).

ESPN was the glue that held the cable bundle together.  The cable TV companies still pay ESPN $7 per month for every subscriber.  But half of the money in the cable TV economy has left and is now in the wild looking for content “Over the Top” (OTT).  

ESPN was getting $7 per household, 100 million households for $8.4 billion in revenue per year and now half of that, $4.2 billion, has gone away.  More accurately, $4.2 billion is not getting paid to ESPN and it is finding its way to other paid streaming services.  This re-routing of paid sports spending is what is driving live streaming video to grow 5 times faster than the overall US economy.

The cable bundle death spasm showed up in the headlines this month when Bloomberg reported that ESPN’s owner, Disney, and Charter Communications, the second largest cable tv provider in the US, are in a dispute.  Charter stopped paying Disney for ESPN for every subscriber, so Disney cut off Charter customers – during the US Open Tennis tournament.

In addition to being a dramatic story, this event will only serve to accelerate the rush of cable TV customers for the exits and open more opportunities for live streaming of video over the internet.

Frequently Asked Questions

How has consumer behavior changed in response to the COVID-19 pandemic, particularly in terms of live streaming video?

Answer: While some pandemic-driven impacts on consumer behavior have dissipated, others have become entrenched. One notable shift is the increased adoption of live streaming video, with 163 million people in the US expected to watch live video streamed on the internet this year, representing a 29% increase compared to pre-pandemic levels in 2019 (eMarketer).

What factors are driving the growth of live streaming video, particularly in the US and China?

Answer: In the US, the growth of live streaming video is largely driven by sports programming, while in China, it is primarily fueled by live streaming shopping. The paid video live streaming industry is projected to grow at a significant rate of 15% per year through 2027, indicating sustained consumer interest and demand (Grand View Research).

How has the decline of the cable bundle impacted the landscape of video content consumption?

Answer: The decline of the cable bundle, with only 60 million households retaining cable TV subscriptions, has resulted in a significant shift in video content consumption habits. This shift has created opportunities for streaming services, as millions of households seek alternative sources of content "Over the Top" (OTT), leading to a surge in live streaming video consumption.

What role has ESPN played in the evolution of the cable bundle and the rise of live streaming video?

Answer: ESPN, historically a cornerstone of the cable bundle, has faced challenges as cable TV subscriptions decline. With the cable bundle's decline, a significant portion of ESPN's revenue has shifted away, prompting a re-routing of paid sports spending towards other streaming services. This dynamic has contributed to the rapid growth of live streaming video, outpacing the overall US economy.

How do disputes between cable TV providers and content owners, such as the recent dispute between Disney and Charter Communications, impact the live streaming video landscape?

Answer: Disputes between cable TV providers and content owners can accelerate the decline of cable TV subscriptions and open up more opportunities for live streaming video over the internet. Events like the recent dispute between Disney and Charter Communications highlight the shifting dynamics of the media landscape, with implications for both traditional cable TV and live streaming services.

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