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Streaming Replacing Cable

In the June 2021 DIGIGRAM, we made predictions for the consolidation of the entertainment industry in our article “Shapeshifting of Entertainment Ecosystems.” The trends we discussed have only continued as the three largest streaming companies, Netflix, Amazon, and Disney/Hulu, now control over 60% of viewers in the streaming market.

Image: A new king of streaming emerged at the end of 2022: Prime Video by Amazon overtook Netflix. (Source)

Now Roku, the company best known for making boxes to stream other companies’ content, just unveiled its own television offering at CES. They aren’t first-movers in this category, as Amazon introduced its own line of 4k TVs integrated with Alexa some years ago. However, Roku’s offering demonstrates the ongoing trend of switching from cable TV to streaming first. 

In mid-2021, streaming accounted for only a fourth of America’s TV viewing time – most streaming was happening on laptops or phones. However, in July 2022, streaming services got more TV viewing time than cable networks for the first time. As cord-cutting continues, 87% of U.S. households had a subscription to a streaming service last year.

The key takeaway is that streaming is on its way to replacing traditional TV channels. So how do cable networks keep up? Most are launching their own streaming services with content that they own, such as Disney+, Paramount+, HBOMax, AMC+, and others. With so many streaming options fighting for market share, access to competing streaming channels might make streaming more expensive than regular cable. This has forced many streaming channels to bundle their content with competitor offerings or offer their services at a lower price, including ads.

Roku not only provides streaming hardware but is now extending into the viewing experience as well. Roku, which makes most of its revenue from advertising on the Roku Channel and on sidebars in its interface, is using its knowledge to create new features only possible with its own viewing devices. What comes next? Potentially offering its own original programming.

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  1. Pingback: Digigram Newsletter of January 2023! – Gert

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