Streaming is the current revolution in video delivery. OK, it may get its biggest boost from the fact that it can deliver video to smartphones and other devices over any good Internet connection, but it also has competitive benefits…and risks. Comcast, the biggest cable operator in the US, may be taking the competitive gloves off with its XClass TV, and that may elevate the competitive impact of streaming on market importance, maybe even higher than the impact of mobile delivery.
Video is perhaps the most important consumer entertainment service, and its roots lie in “cable TV”, which is dominated by live programming with optional recording of shows for time-shifted viewing. Because the original model depended on “linear RF” delivery, video has tended to require specialized media—CATV or fiber cabling. That model doesn’t work for mobile service, and it obviously limits the scope of video service to places where an operator could expect enough customers to deploy wireline infrastructure.
The streaming video model, by delivering video over the Internet, opened up video access to anyone with high-quality broadband. Yes, that meant mobile devices, but it also means “out-of-region” options for the previously regionally-constrained players, like Comcast. AT&T had previously taken a shot at streaming video, and they’ve revamped their streaming strategy, but it didn’t seem to convince wireline video competitors that they also needed to think about their own streaming strategy. Comcast may do that.
A shift to a streaming model would, of course, favor streaming providers, and that’s why competitive pressure created by moves like Comcast’s could kill off linear TV, at least in its CATV/fiber form. Over-the-air programming in major metro areas isn’t likely to be impacted in the near term, though there would be benefits in salvaging the spectrum used for TV broadcast. The problem is that many urban viewers rely on over-the-air, and it’s even popular in some suburbs. There’s a public policy question that would have to be addressed to eliminate linear TV, and I don’t think that will happen soon. However, we could expect other impacts.
One likely possible impact may sound surprising; a shift to streaming video would likely promote municipal fiber. Home broadband needs some strategy for live TV, and linear is not only too expensive an option for most muni projects to handle, the licensing of the programming would be prohibitive. If we had a growing number of national live-stream-TV players, then governments that wanted to offer fiber could be sure that their citizens could have their TV. It’s even possible that they could cut deals with providers for a lower price, perhaps to help offset deployment costs.
But the second impact could complicate things. We’re already seeing networks field their own streaming services, and that could ultimately lead to their reluctance to let their programming be incorporated in a multi-network streaming service of the type that we’re familiar with these days. This could end up either driving up the cost of those cable-like-streaming players’ services, or even driving some of them out of the market. The cost of signing up for every network’s streaming service would likely be higher than today’s multi-network service cost.
The biggest impact we could expect from moves like Comcast’s is that very per-network balkanization of streaming material I just mentioned. It’s more profitable for a strong network to deploy its own streaming services than to deal with a dozen or more aggregators. The streaming model liberates the content owners, and let’s not forget that Comcast owns NBC Universal. Recall that NBC recently had a tiff with YouTube TV over pricing, and over whether Peacock (NBC’s streaming service) should be incorporated en masse into YouTube TV. It’s hard not to see this as a bit of content chest-butting, and linked to the Comcast decision.
The big question is whether Comcast will take things beyond XClass TVs and into dongles or even just standalone streaming. Comcast said (in the referenced article) that XClass TV is their first initiative to sell their streaming service out of their own area, and without Comcast broadband underneath. Linking their out-of-region stuff to TV sales slows down the impact, which is surely what Comcast intends. If the whole notion lays an egg, it’s easy to pull out without compromising a later attempt to go national through some other mechanism. It also lets Comcast gauge the impact of their move on other networks, and competitors.
If we were to see a decisive shift to every-network-for-themself thinking, it bodes ill for the smaller networks who will have a problem raising enough subscribers to field an offering. Might big aggregators of network content then end up depending on those smaller and more specialized players.
Another question that the Comcast moves raises is “What about Amazon?” Amazon’s Prime Video service is widely used, but it doesn’t include live content except through “Channels” which are relationships with live-TV network providers. Might Amazon step up? They already produce multiple TV series of their own, releasing all the episodes in a season at once. Might they adopt a more traditional “it’s-on-at-this-time” model? Might they become an aggregator of smaller networks who can’t stream on their own?
And if Comcast follows XClass TV with XClass Dongle, doesn’t that make them a player like Google, who offers both YouTube TV, Android TVs, and Chromecast for Google TV? The breadth of Google’s play could well be at the root of their dispute with Roku, a dispute that threatens to take YouTube TV off Roku devices (and presumably onto Google’s own dongles).
XClass could be trouble for competitors, and a driver of change in the industry. It could also create a challenge for Comcast. The great majority of its customers are watching linear TV, and the cable industry overall is still largely focused on that delivery model for video. Changing things would mean retrofitting not only the cable plant, but also the customer premises cable modem equipment. It may be that Comcast is signaling that seemingly dire course is now definitely the path of the future. If that’s the case, then it decides the DOCSIS evolution debates, and signals the death of linear TV except (perhaps) in the broadcast-and-antenna world. Streaming, in any event, is clearly winning.