The traditional TV and cable bundle has experienced a downward trend over the last decade. An expanding cohort of cable TV providers are reaching the determination that legacy or cable television fails to yield adequate profits, as the telecommunications industry strives to preserve its sustainability amidst complicated economic conditions. Considering the amount of customers who are interested in streaming alternatives, the cost of running cable and rolling a truck to a customer's home for installation, as well as managing the invoicing and servicing the connections, is a losing battle.
A growing number of cable TV companies are either offering both streaming and traditional TV or getting rid of their legacy TV service altogether. Altice USA, and Charter Communications like other cable TV providers have continued to lose video subscribers as consumers embrace streaming services. As a result, cable providers have undertaken initiatives to enhance the customer experience regarding pricing, product installations, convenience, content provisions and streaming options.
- Altice USA/Optimum, the fourth-largest cable TV company in the US, is now providing a streaming option with its Optimum service. Optimum Stream was previously accessible in a limited number of markets; however, CEO Dennis Mathew announced at the Morgan Stanley Technology Media and Telecom Conference in March 2024, that it will soon be available in every market where Optimum cable TV is offered.
- In April 2024, Charter Communications, the parent company of Spectrum TV, the second-largest cable provider in the United States, announced two low priced streaming TV packages available exclusively to Spectrum internet subscribers. In 2018, Spectrum/Charter began offering streaming TV as standard for all new customers who bought its Xumo streaming player.
The names of Charter's two recently introduced streaming packages are Spectrum TV Stream and Spectrum Stream Latino. The Spectrum TV Stream package will encompass more than 90 news and entertainment channels, a bundle looking very similar to traditional cable tv offerings. Except, it is worth noting that the package does not include any national broadcast channels, such as ABC, CBS, Fox, or NBC, nor does it include any sports channels, including ESPN and FS1.
- Spectrum TV Stream is exclusive to customers who also subscribe to its internet service for $39.99 per month plus tax. This creates a bundle that consists of both the entertainment and the method of delivery, similar to the traditional television cable bundle that Spectrum also provides.
- Spectrum Stream Latino will cost $24.99 per month and provide access to 45 Spanish-language channels. In addition to news and entertainment programming like the Spectrum TV Stream bundle, this plan will feature live sports programming from Univision, Telemundo, beIN Sports en Español, and Discovery en Español.
Streaming access for both Spectrum plans will be provided via the Spectrum TV app, which is available on a multitude of prominent streaming platforms and devices (including Xumo Stream Box, a streaming device developed by Charter in partnership with Comcast), Apple TV, Roku, Samsung Smart TV, and others.
Numerous smaller telecommunications companies have already reached the conclusion that offering legacy television service is not profitable. For example:
- Sparklight Cable (also known as Cable One) discontinued its traditional cable television service in February 2023. Customers are now required to use the new Sparklight TV service, a streaming-only service that requires an Apple TV or Fire Stick to function.
- In April 2023, Frontier Communications directed customers to YouTube TV as its primary video offering, integrating billing for the live streaming TV service on user’s telco bills and providing discounts for the first year.
- Wikes Communications and its RiverStreet Networks also discontinued its cable television service in Virginia and North Carolina. Now, instead of providing its own TV service, the company has partnered with DIRECTV to offer their customers TV.
- CenturyLink has discontinued its TV service and now recommends alternative streaming or satellite services.
Companies like MyBundle can help aid in delivering the next generation of entertainment services for smaller Tier 2 and 3 Internet providers.
Pay TV adoption by service type
Traditional Pay-TV providers deliver services today through both managed networks to a set-top box (Legacy Pay-TV), or over IP through their own branded apps that can be downloaded to consumers’ smart TVs, smartphones, and tablets (streaming TV). vMVPDs also deliver services in the streaming pay-TV space directly to consumers through CTV apps.
According to Parks Associates Q3 2023 data, 62% of US internet households subscribed to some form of pay-TV service, defined as a paid subscription for a bundle of live channels. 21% of households have dropped legacy pay-TV completely and only stream their pay-TV services, and just 18% report only accessing legacy pay-TV via a set-top box. A growing percentage (24%), access their pay-TV services through both means.
Internet service providers and telcos must decide on a new pay-TV approach and collaborating or bundling with an established vMVPD service or SVOD service with a high acceptance rate looks to be the most likely road forward for many telcos trying to survive the ongoing decline of traditional television. Altice USA/Optimum and Charter Communications/Spectrum are choosing a third path – offering its own streaming TV package but reducing the operating costs of providing cable to the home.
Consumers favor streaming because services can be tried, subscribed to, and canceled easily. Pay-TV subscriptions and revenues are falling as users prefer OTT services. OTT streaming is the most popular form of video entertainment today, with 88% of households using at least one OTT service and just 43% using traditional pay-TV, a 32% drop from 2017.
Traditional telcos' cable, phone, and internet bundles no longer appeal to consumers, who now have a plethora of streaming options with little or no contracts. However, bundles have re-emerged in a different framework. Spectrum TV Stream and Optimum streaming internet TV are merely a new bundle that omits the high cost of installing coax cable. Telcos are pursuing aggressive options with streaming in order to keep the pay TV business operating for as long as feasible. According to Parks Associates Q1 2024 research, Spectrum TV services are in 23% of internet homes while Optimum has hovered around 4%.
Service providers are adopting streaming bundles to reduce operational expenses and appeal to larger advertising agencies by facilitating the simultaneous purchase of ad inventory across multiple platforms.
Additionally, bundles help prevent churn of the subscriber completely departing. Parks Associates anticipates we will continue to see the reemergence of a new kind bundle as a way for pay-TV providers to reengage and entice lost customers.
Eric Sorensen is the Director, Streaming Video Tracker, for Parks Associates, a market research and consulting company. He is an accomplished sports and news media executive with extensive knowledge in developing live streaming and Digital Media strategies. Eric spent over 15 years at ESPN helping pioneer the launch of WatchESPN, The Longhorn Network, and SEC digital network. Prior to joining Parks Associates Eric served as Director of Advertising and Digital and Social Content for the Houston Astros.
Parks Associates is a market research and consulting company and has extensive consumer and industry research on broadband, pay tv, streaming and connected home markets. The international research firm hosts the annual conference Future of Video: The Business of Streaming, in Los Angeles, CA in November 2024.
Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by StreamTV Insider staff. They do not represent the opinions of StreamTV Insider.
Article updated to add graph of Spectrum, Optimum pay TV market share.