The consumption of television and video content is changing rapidly in the United States, with a noticeable shift from traditional cable to streaming services.
Community associations that are contemplating the renewal of their bulk cable agreement should take note of the current trends and be prudent in their approach. It is advisable to be cautious when entering into a long-term contract for cable services without including essential contractual safeguards and the necessary flexibility to adapt, given the clear shift towards streaming services.
YFi Advisors provides essential contractual safeguards to ensure that your association has the flexibility to discontinue cable services as part of a bulk agreement, at its discretion, should the association and its demographic deem it more appropriate to operate in a bulk internet-only setting.
In this blog post, we'll examine the trend to streaming, the reasons behind it, and naturally the importance of high-speed internet for a quality streaming experience.
Decreasing Cable Subscribers
According to recent earnings reports from Comcast and Charter, there has been a significant decline in cable subscribers. In 2022, Comcast reported a loss of 2,000,000 cable subscribers, while Charter reported a loss of over 700,000.
Cable subscribers are switching to streaming services due to the convenience of having a wider variety of content available on-demand, lower costs, better user experience, and the ability to watch content on multiple devices.
Both Comcast and Charter have addressed the decline in cable subscribers in their earnings reports and are investing in their own streaming services, such as Comcast’s Peacock, to stay competitive.
Explosive Growth of Streaming
On the other hand, streaming services are experiencing explosive growth, though there is increasing competition and options available for consumers.
Netflix reported having 231 million globally paid subscribers. Disney reported having over 104 million Disney+ Core Subscribers. Paramount reported their Paramount+ service reached nearly 56 million subscribers and grew revenue by 81% year-over-year.
A comprehensive study conducted by Nielsen in December 2022 analyzed the consumer behavior and content access patterns across various delivery platforms. Streaming accounted for 38.1% of content viewership, ahead of cable TV (30.9%) and broadcast TV (24.7%).
The Growth of YouTube
YouTube, which was acquired by Google for $1.65 billion in 2006, continues to experience significant growth both globally and within the United States.
According to a recent study, YouTube accounts for 25% of total global mobile traffic and according to the Nielsen December 2022 analysis, YouTube accounted for 8.7% of total TV usage, significantly surpassing other streaming platforms such as Netflix, Hulu, and Prime Video. Additional studies found that older adults, aged 55 and over, are increasingly cutting the cord and watching YouTube as their primary source of video content.
YouTube will continue to be a significant source of content after an announced multi-year agreement with the National Football League, granting YouTube TV and its affiliates the exclusive distributing rights of NFL Sunday Ticket to consumers. Originally launched in 1994, NFL Sunday Ticket had been previously distributed on DirecTV's satellite service since its inception.
Importance of High-Speed Internet
High-speed internet is crucial for a quality streaming experience. Streaming video content requires bandwidth, and without a reliable and fast internet connection, users may experience buffering, slow load times, and other issues that can negatively impact the viewing experience. This is why it's important for households to have access to high-speed internet to ensure a smooth and seamless streaming experience.
The Case for Cable Television
In certain situations, bundling traditional cable services may be a viable option. This is particularly true in communities with a high concentration of residents aged 55 and over, who may prefer cable television and may not be eager and ready to transition to a predominant streaming environment.
The growing competition and rising costs of streaming services can result in monthly bills exceeding $50 for multiple services. While the retail cost of cable can be quite steep, especially due to added fees and surcharges, a bulk cable agreement can provide a more cost-effective solution for cable services.
However, it is crucial to maintain contractual flexibility that allows you to discontinue the cable component of the agreement during the contract's term. As demographics, costs, and trends continue to change and evolve, having negotiated these important flexibilities can prove invaluable.
YFi Advisors will provide this assurance, as they represent your interests throughout the entire telecommunications agreement process.
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