x
Video/Media

Interpret's Brett Sappington on the streaming evolution and its impact on pay-TV

There's no shortage of change and disruption being meted out by the streaming market.

Netflix, which benefits from a sizable chunk of TV viewing time, is pursuing an ad-supported option to help restoke customer growth. Meanwhile, sports rights are rapidly gravitating to deep-pocketed streaming platforms and the world of Big Tech.

Even the NFL is getting into that act with a new "NFL+" premium streaming service for superfans as the league negotiates a new deal for its coveted Sunday Ticket Package, with Apple rumored to be in the lead to land it.

Beneath all of that, the traditional pay-TV bundle continues to struggle as customers flee from fat bundles paired with high prices, and the best shows and TV series get funneled to direct-to-consumer (DTC) services that aren't part of those bundles.

Long-time industry analyst Brett Sappington recently joined the Light Reading Podcast to sift through and make sense of some of these trends, how they impact pay-TV and what the pay-TV players can do to stay relevant and perhaps benefit from those trends.

While it's too early to predict how successful Netflix will be with ads until more is known about how those tiers will be priced, Sappington believes Netflix will need to keep that price tag low to avoid cannibalizing its ad-free subscriber base.

Though Netflix is playing up the data privacy angle, the subscriber data it does collect could play an important role in advertising. "If they can recommend shows, they can recommend ads," said Sappington, who leads the video and entertainment research practice at Interpret.

Turning to streaming's impact on the pay-TV model, "we've seen this tipping point coming for a while," he said, noting that the industry will need to adjust soon before subscriber levels fall to the point where they have a material impact on ad dollars.

"Before you would ever get to a subscriber floor, I think they [the pay-TV industry] fundamentally has to change … to make the economics work," Sappington said. "We're really looking at a pretty significant shift in how pay-TV works in the next few years just to make the economics work out."

You can download an unedited transcript of the podcast here. If you want to skip around and listen, here's a snapshot of topics discussed during this podcast:

  • Sappington's reaction to Netflix's Q2 earnings, which saw better-than-expected subscriber losses and initiatives focused on clamping down on account sharing. (1:20)
  • How successful Netflix could be with the coming ad-supported service tiers in partnership with Microsoft, and what challenges Netflix will face in order to avoid cannibalizing its existing subscriber base. (03:17)
  • How Netflix's sizable and growing share of TV viewing time could play a role in the success of the streamer's new ad play. (11:25)
  • As major programmers and studios continue to strip-mine their best content for direct-to-consumer services and alter the traditional availability windows of new shows and movies, what will that mean for the already-struggling pay-TV bundle? (14:00)
  • How new streaming deals for live sports, long viewed as the glue holding the pay-TV bundle together, stand to further disrupt the video marketplace. (18:08)
  • The role the National Football League's new NFL+ premium streaming service for superfans could play in the streaming market. (23:31)
  • As more entertainment content and live sports shift to streaming and direct-to-consumer offerings, what is the future role of the pay-TV package as consumers create their own bundles? How can pay-TV distributors stay relevant as the market amplifies its focus on streaming and the direct-to-consumer sales model? (28:24)
  • Is streaming ushering in a "Great Rebundling" that can provide lower prices, or is this merely a shift toward an aggregation model in which consumers are forming "collections" of streaming services devoid of discount benefits? (31:42)

— Jeff Baumgartner, Senior Editor, Light Reading

Be the first to post a comment regarding this story.
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE