Live TV was for years the Golden Goose of wireline services, but we all know what happened to the Golden Goose of fable. The same thing may be happening to live TV according to a Light Reading piece. I don’t agree with everything in the article, but I do agree that the forces of the market are aligning convincingly against TV as we know it. The question is whether there’s any basic shift in technology or practices that will save anything at all from destruction.
Television has been, and still is, the dominant form of family entertainment. Despite an onrush of smart devices, despite interest in gaming, and despite the increased availability of streaming video that’s not part of live TV, TV viewing has declined very little in the last decade by the most reliable measures. However, even in that statistic we can find the first source of trouble.
What’s become much more common (three to five times as common by most surveys) is time-shifted viewing. People today tend not to watch shows during their scheduled slot, partly because they’re doing something else at the time and partly (but increasingly) so they can skip commercials. Time-shifting means that people don’t build their evenings around TV shows as they did in the past. I don’t need to watch “my show” at 9 PM every Tuesday, or whatever. Except for news and sports, most people today don’t insist that they watch a show live.
The commercials are a problem in themselves. It’s not uncommon these days to find a station that’s playing three minutes of commercials for every ten minutes of the actual program. The interruptions are constant, the commercials are often repetitive, and there are a lot of them in a row—five to seven in many cases. Long commercial delays are one thing parents say contribute to kids either playing games (and thus not really watching) during a show or watching something else on a personal device.
Personal devices enter in more as a means of taking entertainment with someone than watching something different. Young people would generally prefer not to be constantly under parental eyes, and so might go to their room or to someone else’s home, where they tend to use personal devices to entertain themselves. This habitual avoidance of supervision becomes habitual avoidance of live TV.
Show quality is also cited by many of the people I talk with as a reason to rely on TV less. If you ask someone whether TV is “worse” than it was five years ago, my experience says that two out of three will say it is. If you ask whether their favorite show that’s run for two or three seasons has gotten better or worse, an even larger percentage says “worse”. A friend complained to me recently that “there’s nothing good on anymore”.
Streaming has impacted this primarily by offering an alternative. You don’t watch the best of a bad lot anymore, you turn to Netflix or Hulu or Amazon and grab something from the past (when, most say, stuff was better anyway). As people become more accustomed to what you can get in online video libraries, they’re less tolerant of network TV. The less they watch, the more commercials the networks need to insert to make the same (or more) money. That drives more viewers away, and the feedback loop begins.
The premise of the Light Reading piece is that operators will be driven to provide connectivity, meaning high-speed Internet, rather than focus on TV, and that’s where I part ways with the thinking. I do believe that having linear TV delivered to the home through a facility that either can’t provide or steals capacity from the delivery of broadband Internet is on its way out. What I’m not sure of is whether broadband Internet alone is a viable business model for many.
But, Internet-only proponents will argue, isn’t Verizon heading that way already? Don’t we have countries where broadband Internet is highly profitable? Yes to both, but in both the case of Verizon and many other countries, the difference is the high demand density of the operators’ market. If your infrastructure passes a lot of dollars for each mile of deployment, you can be profitable selling broadband Internet service. Verizon has seven times the demand density of the US on the average, and there are countries (Japan, for example) that has twelve times the demand density of the average for the US.
This is where the 5G/FTTN millimeter-wave hybrid technology comes in. If it’s possible to deliver broadband to urban and suburban locations using this combination, it could reduce the operators’ cost of access by as much as 70% versus FTTH, making it slightly cheaper than CATV cable. However, the combination can only support streaming video, not linear TV. Most wireline providers who rely on TV rely on linear delivery, and since the new hybrid would support much faster broadband, its advent will pose a competitive risk to wireline providers who have to carve out capacity and cost for linear delivery.
Streaming live TV is possible, of course, but it’s not necessarily easy. DirecTV Now, a streaming service that took off and for a time boosted AT&T’s TV subscriptions, quickly fell from grace and now its users face a price increase. Verizon seems to have dropped its own streaming strategy, but will these issues matter if everyone were to be forced to either adopt a streaming model or get out of the TV business?
Maybe. If you can get the cost of 5G/FTTN down enough, broadband Internet could be profitable for at least 90% of homes. What then happens to “TV”?
Amazon might offer an answer, which is that custom programming would be changed to a more library model, rather than live streaming. Amazon’s original series are released as a season and streamed on demand, not metered out at a fixed time on a given day of a week. Could other networks move to the same model? Interestingly, while it’s the future technology of 5G/FTTN that may create the real risk to linear TV, it’s the past that might save it.
“The past”, meaning over-the-air TV. An increased number (at least a quarter, though the number is hard to pin down) of households get some or all their TV over the air. A decision to abandon linear TV and fixed timeslots for viewing new programming would largely disenfranchise these viewers, who would surely complain to lawmakers and regulators. Whether this would save the concept of live TV will depend on how the other factors cited here play out.
The biggest issue is user satisfaction with the combination of show quality and commercial interruptions. Deterioration in this space risks negative feedback and accelerated deterioration, resulting eventually in shows and commercials few will be willing to watch. The decisive issue will likely be whether children shift their entertainment from TV to games played on computers, phones, and tablets, or watch library content on one of these devices. If that happens, then “family viewing” declines, scheduled programming can no longer accommodating viewing behavior, and live TV is at serious risk.
That doesn’t mean that operators, both telco and cable companies, would abandon selling TV services. Some might work to develop their own streaming and library combination and others could partner with OTT streaming video players. There will always be an opportunity for both mobile and fixed broadband providers to resell content services because of their established, and even preferential, position with customers. But if we continue to see negative reinforcements in the form of angst over show quality and commercial content, then linear live TV may be in trouble.
All of this is good for networking, at least IP networking. Even without the reinforcing concept of 5G/FTTN, a shift away from linear TV is happening for reasons of viewer behavior, and this will induce wireline access providers to repurpose their connections to emphasize Internet over a combination of Internet and linear, creating significantly more traffic. It also changes the caching equation because there’s less synchronicity in the material people are viewing. Most viewers watch a scheduled show when it’s scheduled, even with time-shifting. There is no clear pattern to when they watch an Amazon series that’s never had a specific timeslot.
At one level, there’s nothing really surprising here because people have predicted the death of linear for a decade. At another level, we’ve never before seen the clear signals that from a viewer behavior and technology perspective, it’s actually possible. We’re seeing those signals now.