- Posted January 1, 2014 by
This iReport is part of an assignment:
The changing TV landscape
The great potential of the Internet to consolidate information and make it instantly available has changed just about every type of consumer purchase pattern, from buying vacation packages to securing auto insurance. Home entertainment, long-dominated by what was on the television screen through paid cable and satellite subscriptions, has also been dramatically affected, as evidenced by the significant rise of free and low-cost streamed TV shows and movies.
Why the surge in demand for such a service? For one thing, the price if right, especially when compared to the rising costs of TV costs, which are expected to reach an average of $123 per month by 2015. Other indicators of a steady migration away from the conventional subscription model are widespread customer complaints over channel bundling, which basically forces people to invest in channels they are not interested in watching in order to gain access to the ones that they do. “As pay-TV costs rise and consumers’ spending power stays flat, the traditional affiliate-fee business model for pay-TV companies appears to be unsustainable in the long term,” said Keith Nissen, research director for the NPD Group.
If satellite and cable subscribers start leaving en masse, there’s certain to be service options that supply their continued need for home entertainment. Right now that is being satisfied by companies like Netflix which is the most popular video on-demand (VOD) option for consumers at $7.99 per month. Conventional wisdom is that the Netflix licensing model is bound to be challenged and attacked by the ‘big six’ media groups who will want to regain some control over viewership.
Quickly hopping into the scene are other potential game changers like FreeCast’s Rabbit TV. Since its launch in February 2013, Rabbit TV has assembled the world’s largest online library guide of freely available TV shows, movies, live events, and in so doing amassed over 2 million paid annual subscribers. The low price tag of the subscription, $10 per year, encourages more rapid subscriber growth and naturally drives recurring upsells on premium content like pay-per-view movies, series and subscription channels, delivering revenue directly to the networks producing the content. This business-friendly, diplomatic model doesn’t interfere with existing cable licensing agreements, yet addresses the cord-cutters and zero-TV households, allowing the networks to essentially ‘double up’ on revenue.
“Last year, a survey determined the average person would pay $12 a month for online-only access to HBO’s seven channels,” said William Mobley, FreeCast CEO. “We expect to accumulate an active audience of over 10 million subscribers in the next year - at $10+ monthly this quickly adds up to the same $100 million these providers make from over 50 million cable subscribers pulling $2 per month in licensing fees. It’s just a matter of time before the networks realize how much money they’re leaving on the table.”
Freecast Rabbit TV has recently leaked news of several big announcements, including mobile capabilities, a next-generation micro set-top box, and a fully-functional PC boasting a powerful quad-core processor and app manager, which the company says will make any TV ‘The Smartest TV Ever.’
Changes are afoot in the traditional world of pay-TV; the audience of cord cutters is getting bigger; and the major players are squaring off and potentially forming alliances. This should get interesting.
- Tech and science