Whilst free video has proved to be a hit with consumers, for example services like YouTube, Youku and Twitch, there has been a move to monetise these services via subscription and PPV (Pay per View), rather than the through the more common advertising based models.
It is now said that video hosting giant YouTube has initiated plans to offer some popular cable channels via its online platform as part of a premium subscription package. The service is known as ‘Unplugged’ and may launch as soon as 2017, however none of the ‘big name’ cable brands (Comcast, NBC Universal) are currently signed up to the project, although it has been reported that they are in talks.
It is believed that content will be offered in the form of certain packages, for example, comedy, lifestyle, movies etc and could also be offered in cheaper ‘skinny’ bundles. This would appeal to consumers, many of whom want to move away from being tied to expensive cable company packages; it would also benefit the cable companies themselves as they would still have some revenue, rather than having customers move to a purely OTT provider like Netflix.
As well as YouTube, Hulu has also announced plans for an online service providing live channels to customers, with the platform due to launch in Q1 2017, including broadcast channels offered at a price point of $35 per month.
US TV Industry Snapshot
In addition to ‘cord cutting’ a new trend is emerging, called ‘cord shaving’, whereby users attempt to reduce the cost of their subscriptions, seeking out ‘skinny bundles’ of the content they desire, rather than paying for hundreds of channels, many of which they will never watch.
Walt Disney, the parent company of ESPN, has reported that the network saw a fall in subscribers of 7 million between Q4 2013 and Q4 2015, reaching 92 million. It is thought this could fall below 87 million by the end of 2016. This could force the service to launch its OTT platform; if the concept of cord shaving continues, those services which rely on carriage fees linked to subscriber numbers, could go out of business. So whilst skinny bundles and cord shaving are heralded as being a potential savior for cable companies, with their attempt to reduce cord cutting, the practice may inadvertently negatively impact companies which rely upon carriage fees.
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