With the upcoming Independent Show next week, we at ETI are reminded of the fast-paced evolution of the cable industry. So many interesting things are happening, but with one common theme – broadband.
It’s pretty clear that broadband has supplanted video as the most important service to cable operators, certainly from a revenue and profitability perspective. The business model for video is not what it used to be and there seems to be no end in sight. Rising programming costs are making video a difficult business proposition.
Rising costs, particularly retransmission costs, are having a material impact on the business and customers often get caught in the middle as a result. The American Television Alliance (ATVA) recently pointed out that 2019 has already seen a record number of TV blackouts due to retransmission battles, and we’re only seven months in. The situation is causing some smaller video providers to evaluate exiting the video business altogether.
Broadband to the Rescue
Luckily though, cable companies have an ‘ace up their sleeve’ thanks to broadband. It’s an in-demand, profitable service that’s still growing. Ironically, this challenging and shifting video business is beneficial to cable companies.
As more subscribers look to alternatives to expensive pay-TV services, they’re cutting the cord and turning to lesser-expensive OTT video options. That OTT trend drives more demand for broadband and cable companies are in a great position to satisfy that demand and profit as a result.
A recent report from OpenVault revealed that, on average, cord cutter homes consume nearly twice as much monthly bandwidth at 395.7 GBs, than pay-TV homes, which consume 209.5 GBs.
The OTT trend is only going to accelerate. In the next year, there will be several high-profile SVOD services coming online, including Disney+ from the Walt Disney Company and HBO Max from AT&T’s WarnerMedia. These high-profile services will join the likes of Netflix, YouTube TV, Hulu, Amazon Prime Video, and a host of others. As more and more consumers turn to OTT to save money, they’ll want and need better, faster broadband.
Who better to capitalize on that trend than cable companies with DOCSIS-powered robust broadband services? The cable industry recognizes this opportunity. That’s why we see great innovation happening, including the recent unveiling of a path to 10G service for cable operators. These and other innovations will continue to keep broadband at the center of the future of the cable industry.
ETI has had the privilege to work with a number of independent video providers, helping them understand these trends and monetize them. Our suite of services addresses a variety of important operator issues including customer churn, network expansion, monetization strategies, and technology integrations, among others.
If you’re going to TIS in Chicago, be sure to stop by our Booth #428. We look forward to a conversation around helping companies maximize their opportunity with cable’s bright broadband future.
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