Streaming video that includes live TV is the biggest threat to the traditional linear model of television. Depending on just what the operator does with it, that makes it the biggest threat to the cable TV and telco TV franchises, or the biggest opportunity. I’ve blogged about the overall issues of streaming live TV already, but I’ve recently had a chance to look at the space closely, so I want to share my hands-on perspective.
Beauty, and live TV streaming, are functionally in the eye of the beholder. Streaming fans tend to come from two different camps. One represents TV viewers who either are not regularly viewing at home, or are tending to consume time-shifted material more than live material. The other represents more-or-less traditional TV viewers who want to “cut the cord” and eliminate the charges and contracts associated with traditional linear TV. The camp you’re in is critical when you look at the various live TV streaming options.
Hulu’s live offering is in beta still, but IMHO it illustrates a concept targeted to the first of my two groups. The experience is nothing like watching linear TV. There’s no channel guide, and getting to network live programming is awkward to say the least, for those who “watch TV”. On-demand or time-shifted viewing is typically managed by show and not by time, and so things like channels guides and the notion of “on now” are fairly meaningless. For this group, it may make perfect sense to go to a “show” tile to find both VoD and live programming, and to go to a “network” tile for the “on-now” stuff.
What you want to watch is another dimension. Hulu, Google, and Sling TV all have limited channel repertoires, and I think that’s also something appropriate to my first on-demand-centric group. If you want to watch something on now, then having more channels to choose from gives you a greater chance of finding something you like. If you’re just looking for something interesting, then it’s more the totality of shows/movies than the number of live channels you’d like. Amazon Prime is a perfect example; you look for material based on your areas of interest, and it’s on-demand.
DirecTV Now and Playstation Vue are more aligned to my second group of viewers. Both have linear-TV-like channel guides that let you keep your “on-now” perspective of viewing. Both also have a larger inventory of channels (and more channel bundles at different price levels). This means that people accustomed to linear viewing with cable or telco TV have a better chance of getting a package that includes the channels they are used to watching. Both include local stations in major market areas, so you don’t miss local news and weather or local sporting events with local announcers.
Playstation Vue and DirecTV Now illustrate another difference between the two groups of viewers. My second linear-committed viewer group are most likely to watch shows in groups, where the first viewer group is most likely to watch solo. This reflects in the fact that Playstation Vue supports more concurrent sessions than DirecTV Now, and of course the link between Playstation Vue and Playstation as a game system reinforces that solo model.
Another important point is DVR. Virtually all linear systems allow for home recording of TV shows, but because streaming TV doesn’t require a specific “cable box” in which to site DVR functionality, the capability isn’t automatic in streaming services. However, everyone but DirecTV Now offers cloud DVR (some at additional cost), and DirecTV Now is supposed to get the feature, along with a GUI upgrade, sometime in the spring.
For some, DVR isn’t necessarily a key point. Most of the streaming live TV services include archives of past shows, usually available quickly and for a month or so. Many networks let you sign onto their own streaming apps (on Roku, Google Chromecast, Amazon Fire TV, etc.) using TV Everywhere credentials, after which you can access shows within three or four days max of when they aired. How long material is available will vary, though. There’s also a PC package called “PlayOn” (also available in a cloud version) that will record not the live shows but the archived shows, which means you won’t lose them after 30 days or so, the usual limit. With some effort, you can make live streaming TV work almost as well as linear TV, and with lower cost.
The qualifiers I keep using, like “almost”, are important because the second group of cord-cutters includes the generation less likely to be comfortable diddling with technology or dealing with changes. The GUI is one such change. Linear TV typically has a fairly architected user interface, with a custom remote that makes it easier to do what you need/want. With streaming live TV, there’s a need for streaming providers to accommodate a range of different streaming devices, each with their own control and perhaps a different mobile app. You can get things like voice control of TV that might be impossible with linear, but many people find the change in interface a bit jarring.
The setup for streaming can also be intimidating to non-technical people. You need some sort of device to stream to. There are add-on devices from Amazon, Apple, Google, and Roku (for example), and there are “smart TVs” that can directly support streaming, plus you may be able to cast to your TV from your phone or computer, as well as stream directly. All these work a bit differently, and not all the streaming channels are supported on a given device. You need to check what you can get before you make a deal, and if possible, you should view your choice in a friend’s home before you buy.
Then there’s the quality of your home network. You probably need to think seriously about 50Mbps or better Internet service to stream live TV reliably to a typical home. Some people tell me they can make 25Mbps work, but it depends on how many independent streams you have and whether you’re streaming 4K or a lower resolution. That means that many DSL connections are going to be limited in terms of streaming support, which is likely why AT&T elected to buy DirecTV and start supporting a satellite delivery alternative to U-Verse TV.
In the home, the “standard WiFi” may or may not work. Modern WiFi is based on two frequency bands, 2.5Ghz and 5Ghz, and there are two classes of 802.11 standards available, the “single-letter” ones like 802.11n and the “two-letter” 802.11ac. The former is limited to 54 Mbps and of course it’s shared, and you might find your WiFi use congests things. The latter lets you operate at more than double that speed.
Streamers may also face issues with coverage. A large home can be covered completely with a single well-placed, state-of-the-art WiFi router, but many of the standard WiFi routers that come with broadband Internet service will not cover anywhere near that, and you’d need to have a “mesh” system or repeaters. The problem with WiFi mesh/repeater technology is that most of it is based on a WiFi relay principle, where WiFi both connects the repeater to distant parts of the home, and also connects the repeater to the master WiFi router. That means that the repeater has to handle the same traffic twice. Multi-band WiFi is probably critical for repeater use.
You can probably see the challenge here already. If there’s no computer/Internet literacy in a household, it’s going to be a long slog to get streaming to work unless you’re lucky and it works out of the box because you got the right gear from your ISP or you have a limited area where you need access. And if you’ve followed the trend of using networked thermostats, security devices, etc. you may have even more problems, because changing your WiFi will in most cases disconnect all that stuff, and you’ll have to reconnect it.
Where does this leave us? If there are two different viewing groups with two different sets of needs, then logically we’d really have two different markets to consider. So far, streaming has penetrated fastest where it offers the most incremental value and the least negative impact on expectations. If it continues in that channel of the market, it would likely eventually change TV forever, but not in the near term. If it manages to penetrate the second market group, it transforms TV at the pace of that penetration. It’s the TV-oriented group, then, that matters most.
Sling TV owes its leading market share to its appeal to my first mobile-driven, on-demand, group. DirecTV Now has the second-largest market share, and I think the largest potential to impact the second group. AT&T would have suffered a net loss of video customers were it not for DirecTV Now, and they mentioned the service and plans to upgrade it on their last earnings call. They have the money to push the service, and for AT&T it offers the attractive capability to ride on competitors’ Internet access and so draw TV revenue from outside the AT&T territory.
That last point is probably the factor that will determine the future of streaming TV and thus the ongoing fate of linear TV. The success of AT&T with DirecTV Now would certainly encourage competitors to launch their own offerings. Amazon, who reportedly decided not to get into the streaming live TV business, might reconsider its position. Google, remember, already has an offering, and they’re a rival of Amazon in virtually every online business. Comcast and Charter both have basic wireless streaming, though not yet ready to displace traditional linear TV in their own service areas. There are lots of opportunities to step up the streaming competitive game, and boost streaming live TV overall.
Streaming isn’t going to make TV free, and in fact if it totally displaces linear and induces providers to offer different bundling strategies, it might end up killing some smaller cable networks who only get license fees as part of a larger package. It will make TV different, and shift the focus of wireline providers from linear video to Internet. Since Internet services are lower-margin, the shift could put them all in a profit vice unless they do something—like focus on streaming, and what might be beyond it in terms of OTT video services. That’s a shift I think is coming sooner than I’d expected.