Assignment 5-Cable and Satellite vs. Video Streaming

With the average cable bill amounting to close to a hundred dollars, I would think that people are starting to weigh out their options. I for one would rather wait to watch a TV show for a few more months, and watch it on Netflix, to save money. According to a study done by NPD, the average monthly TV bill increases by about six percent each year, and is said to be hitting two hundred dollars by 2020.

By the end of March 2012 the number of Netflix subscribers reached 26.1 million.The number of Hulu subscriptions hit 2 million. Each service charges eight dollars a month. I’m not surprised that there is such a huge interest in these video streaming sites. Eight dollars a month means ninety six dollars a year. The average monthly cable or satellite bill is about a hundred. I wouldn’t be surprised if there were many people out there thinking, “Would I rather pay 96 dollars a year or 96 dollars a month?,”  and then deciding to cut their ties with cable and satellite companies. I assume that more people are headed towards Netflix, since Hulu is ad supported. I feel that for the same price, without the adds, people would be silly not to choose Netflix. You can see that people have already been thinking that way, since Netflix has 26.1 subscribers and Hulu has only 2 million, a thirteenth of the subscribers that Netflix has. The only advantage that Hulu has, is that they air new seasons of TV shows sooner. I am willing to wait a little longer to watch my shows uninterrupted, but I know that some people are more about seeing their show as soon as possible. I feel as though I might as well be watching cable, if I’m watching a show with tons of advertisements. Netflix is also planning on expanding globally, once the world economy starts to look promising enough for them to make a decent profit.

ImageAs you can see, Netflix has a lot more content also. Amazon Prime is cheaper, and is including other services like free eBook rentals and free unlimited shipping of any of its products. If these are things that are used often, it would be worth it to get Amazon prime, but if you are more worried about content, then Netflix is the way to go.

Google and YouTube are getting together to create an online original content TV network. They already have 96 shows listed for the start of their new network. They are working directly with celebrities and Hollywood producers, so their content is bound to be as good as cable television. Brian Bedol, who created Classic Sports Network and College Sports Television will be working with You tube to air sports content also.Yahoo and AOL are trying to compete.You tube has a 15 million dollar deal with Disney also to try and attract a bigger audience to Disney.com. I feel as though You tube will come out on top, since they are backed by Google with a 100 million dollar contract. They have a greater amount of money and resources, Their programming will be a little better quality and people will be more inclined to support You tube over AOL and Yahoo. Apple is another company who could make a ton of money off of this concept. They already have their products sold in 123 countries around the world. If new features were added to get just a mere one percent of their customers to pay a dollar a month more on their iPad or iPhone, they could make enough to afford actors and producers. Apple can easily be another form of competition.

TV shows still air a little sooner on cable and satellite TV, than on Netflix and Hulu, so I think that cable and satellite will be able to hang on for a little longer. If it’s true that the monthly cable and satellite bills will be reaching 200 dollars by 2020, as Venturebeat.com says, then cable and satellite will not survive. Given all the competition that they have, it is so incredibly foolish to raise the bill at all, especially such an insane amount. They are thinking in the present and not in the future. Sure, people still have cable and satellite subscriptions, so these companies will make a ton of money raising the bill for now, but people will reach their limit and cut ties with cable and satellite companies. These companies are thinking more money now, while forgetting that this will probably mean broke and bankrupt in the future once people start realizing that the benefits of online video streaming out weigh those of cable and satellite TV. Given the current state of the economy, people are already trying to save money wherever they can, so I think it’s only a matter of time before video streaming becomes the main way that we watch TV. The greed of Cable and satellite TV companies will cost them.

There never seems to be a shortage of competition.  Cable and satellite companies will need to keep that in mind when they start to think about raising prices again. People will still watch just as much TV as they do now, but they way that they watch it will change. Netflix, Amazon Prime, Hulu and other online streaming services are just the start of this wave of change.

Information was found from these sources:

http://venturebeat.com/2012/04/17/hulu-plus-subscriptions/

http://venturebeat.com/2012/04/10/average-monthly-pay-tv-bill-to-hit-100-by-2013-year-of-the-cord-cutter/

http://venturebeat.com/2011/11/14/the-future-of-tv-dead-man-walking-or-bigger-than-ever/

http://gigaom.com/video/netflix-international-expansion-plans/

http://www.huffingtonpost.com/2012/04/23/netflix-q1-2012_n_1447123.html

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