In late August, Disney-owned networks, including ESPN, FX, Disney Channel, and some ABC stations, suddenly became unavailable to Charter Spectrum cable subscribers. This incident marked the latest example of media companies and paid TV distributors getting entangled in disputes over carriage fees. However, it was not the first occurrence of such disputes.
DirecTV customers in more than 100 markets were without access to our stations for multiple months due to the same issue. Unfortunately, carriage disputes have become all too common. Between January and March of 2023, carriage disputes affected FuboTV, Hulu Live, and DirecTV customers. The answer to why this keeps happening and how streamers can avoid losing access to local channels lies in understanding the business of TV. That is what we aim to address today.
Something different is happening now, distinct even from when we questioned the vitality of live TV in our video on the topic a year and a half ago. The agreement between Shutter and Disney reveals a shift in the streaming industry and answers a question many are currently pondering.
What is the Future of Live TV?
We are making three predictions based on what we are currently observing in the streaming industry regarding the future of live TV. Firstly, we anticipate the emergence of more bundles. Secondly, premium live TV streaming services and ad-free on-demand apps are expected to become more expensive. Thirdly, free ad-supported streaming services and light add-on services are poised to dominate the market. Now, let’s break down these predictions.
More Bundles Are on the Way
The Rise of Bundled Offerings in Cable TV
We have reasons to believe we will witness a surge in bundled offerings. The Disney-Charter agreement serves as a prime example of this trend. To reinstate Disney-owned channels on Charter and Spectrum platforms, Disney had to embrace a new type of bundle.
Cable TV’s Changing Landscape
With a growing number of people opting to cut the cord, the subscription rate for traditional cable TV has dipped to its lowest point ever. Nielsen research conducted in July revealed that cable television accounts for less than 30 percent of TV viewership.
The Emergence of New Bundles
Consequently, cable companies are eager to preserve their customer base, hence the emergence of these new bundles. Spectrum Charter customers will receive Disney+ Basic along with Spectrum’s TV Select package in this particular deal, while Select Plus customers will gain access to ESPN+ as a bundled offering.
A Resemblance to HBO Max
This approach resembles how HBO Max is made available to Spectrum customers who subscribe to HBO through their cable provider, where they receive Max for free. Disney+ is set to follow a similar path. However, what sets it apart is that customers are losing access to several Disney networks, including Freeform, Disney Junior, Disney XD, FXX, and Nat Geo Wild.
Changing Cable Landscape
However, Spectrum customers can still access ESPN networks, FX, Nat Geo, Disney Channel, and Disney-owned ABC stations. This development underscores the fragmentation of the traditional model and signals its eventual demise. Charter acknowledged this shift in an earnings call, “We’re on the edge of a precipice.”
Disney’s Predicament and Industry Voices
Disney is currently grappling with the predicament of its struggling linear networks, apart from ESPN, which are proving financially unviable. With efforts underway to make ESPN directly available to consumers, questions loom over the cable industry’s future.
According to reports from the LA Times, Disney is even considering selling ABC, and it has garnered interest from potential buyers, including Nexstar, which has offered up to $10 billion for ABC, Disney-owned and operated local ABC affiliates, and the FX and FXX cable networks. Regardless of the outcome for Disney, many voices in the industry assert that the current system is fundamentally flawed.
The Transformation of Cable TV
The introduction of streaming services into a cable bundle at no additional cost represents a significant step toward an imminent transformation. If other streaming services like Paramount Plus, Peacock, and Stars were to follow suit and become available through Spectrum, offering both content and billing in one convenient location, it could position companies like Spectrum as the new central hub for TV services.
This is a role that tech giants like Amazon and Google have been aspiring to fulfil, but there has yet to be a single, convenient platform for obtaining and, more importantly, paying for all the content you desire to watch.
Cable Companies’ Transition
In conclusion, while cable TV may face potential obsolescence, cable companies, especially those offering broadband internet services, may transition to becoming the new gateway for accessing all your streaming subscriptions.
This transition is crucial because consumers must obtain value for their money, especially in a landscape where live TV costs are expected to rise.
Rising Costs of Live TV Streaming Services
Especially as things continue to get more expensive, which is our second prediction, the cost of live TV will rise.
Growing Divide in Streaming Services
There’s a growing divide between premium live TV streaming services like YouTube TV and Hulu Live and on-demand apps like Netflix and Max.
Cost Comparison
The former now costs seventy dollars and up, while the latter comes in at around twenty dollars a month at the recording time. Live services like Philo and à la carte services like Sling are attempting to bridge the gap with offerings at 25 and 55 dollars, respectively, again at the time of recording.
Challenges in Cost Savings
However, the bottom line is that premium live TV streaming services that include your local network and all the cable networks you want to watch are getting closer to what cable used to cost. Where are the savings that streaming once offered?
Those savings are still there, but as the streaming industry matures, we must work harder to get what we want without overspending. Realize that a “set it and forget it” approach to subscriptions will erode potential savings significantly.
The Premium Price of All-Inclusive Live TV
We’re going to see a premium price placed on all-inclusive live TV streaming services.
Rising Costs of Ad-Free On-Demand Content
We’re also going to witness the price of ad-free on-demand content skyrocket. Creating content is expensive, and media companies need to generate more revenue.
The Shift Towards Ad-Supported Content
Understanding the business behind this trend indicates that it will persist, and rising prices drive the growth of FAST services (free ad-supported streaming services).
The Popularity of FAST Services
Nothing is growing faster right now than FAST services like Pluto and Tubi. They have rapidly expanded their user bases, with Tubi boasting 74 million monthly active users in July, accounting for 1.4 percent of all TV watching. Pluto has slightly more active users at 80 million.
Freebie Streaming Services on the Rise
Usage is up across all leading FAST streamers. One in three U.S. viewers now watches them, and users are increasing for freebie Roku, Crackle, Pluto, and Tubi.
Future of FAST Services
FAST services are set to become even more popular as the cost of pay TV continues to rise, forcing people into ad-supported plans.
Challenges in Accessing Premium Content
The challenge remains in gaining access to live sports and original content, which are the most sought-after types of content. Studios will continue to charge a premium for these offerings.
Staying on Top of Streaming Subscriptions
This underscores the importance of staying on top of your streaming subscriptions.
Guidance for Cost-Effective Streaming
It’s easier than ever to let your costs creep up as prices continue to rise. Fortunately, by keeping an eye on your subscriptions and investing time in finding the most cost-effective ways to watch what you want, you can still secure excellent deals on self-made bundles without being tied to a contract.
Conclusion and Future of Live TV
If you’re looking for ideas on where to start, watch our video on “20 Bundles You Can Create Yourself.” We’ll continue to guide you in finding the content you want to watch at the best prices and keep you updated on changes in the streaming landscape. Share your thoughts on what you believe the future of live TV holds in the comments below.
FAQs (Frequently Asked Questions)
1. Why are there so many disputes between media companies and cable providers?
Carriage disputes often arise over carriage fees, where media companies and cable providers disagree on the cost of carrying channels.
2. How is the streaming industry changing the landscape of live TV?
Streaming services are introducing new bundles and changing the pricing structure of live TV, leading to shifts in the industry.
3. What is the future of live TV streaming services?
The future of live TV includes more bundles, rising costs, ad-free content, and the dominance of free ad-supported streaming services.
4. How can consumers save money on live TV streaming services?
Consumers can save money by carefully managing their subscriptions and exploring cost-effective bundle options.
Viewers may encounter challenges accessing live sports and original content, which often come at a premium price.
