Of Cord-Cutting and Over-the-Top Streaming Services: What TV & Cable Companies Must Do to Save the Telly in the Living Room

If over-the-top (OTT) messaging services proliferated the year 2014, the likes of Netflix, Hulu, and Amazon Prime invaded 2015, becoming an obvious threat to the once flourishing TV industry. Reporting another 3.3 million subscribers this July 2015, Netflix successfully changed the mechanics of the television game, even going as far as bypassing pilot season requirements for the Primetime Emmy Award nominated drama series House of Cards.

In a report by Business Insider, a significant 40% of Time Warner and Comcast subscribers cut cords after four months of subscribing to Dish Network’s Sling TV, a TV-on-the-internet bundled service offering an affordable $20 a month package for viewing select cable channels. An alarming 60% of Dish and DirecTV satellite subscribers also pull the plug after opting in Sling TV, with Netflix complementing the consumer binge-watching experience by taking a bite out of the market share last August by 58%.

While cord-cutting remains a myth to those who refuse to accept the present decline of Pay TV, television and cable companies must squarely face the inevitable threat and embrace the paradigm shift from traditional thinking to digital thinking.

Tell Great Stories.

At the end of the day, it all boils down to content. Content differentiates a television company from merely a linear TV network into a storytelling network. A powerful story transcends beyond conventional formats and blurs the definition between a TV series and a movie. Changing consumer patterns suggest that device and length are becoming irrelevant to viewing experiences. Does a film have to be watched in theatre to be called a film? If an entire season of Daredevil is available only for viewing on the Netflix app, is it no longer called a TV series, as it is not aired on TV? Consumer habits have always dictated that content goes beyond a single screen. Humans by nature are a mobile race and strong content demands high mobility. If there is anything that the music business has taught the entertainment industry, it is giving the audience full control of the remote, and let them watch what they want, when they want and where they want. TV companies need to only keep one thing in mind: story.

But how can television companies reinvent their ways of telling a story of impact? Is it enough to bring the best lineup of Hollywood stars in a drama sitcom?

Look at the Numbers.

Gone are the days when television companies would rely on the ratings to dictate programming decisions. Technology has made it possible to understand consumer habits in real-time. Netflix has attributed much of its success to data analytics every time they put out a new show. What kind of shows are users searching for? Do they complete an entire episode in one sitting? How long do they binge-watch? Never has it become more reliable to look at the big data and decide which actor is the most effective in a TV series. Maintaining a library of original shows shouldn’t only be the priority, but established TV networks must work on building and enriching their metadata, and correlate these into viewing habits. It is not enough to give audience full control, but users will be looking for recommendations that will personalize their daily programming.

While there is an obvious trend for Netflix and Hulu to release serialized dramas filled with dark, dramatic, and crime themes, VidCon’s annual multi-genre online video conference showcasing top content creators from various platforms such as YouTube, Vine, and Vimeo prove that user-generated content is as appealing as premium TV content.

Collaborate.

What do Instagram photographers, YouTube stars and Wattpad authors have in common? They are the new breed of content creators, who conceptualize storyboards, shoot frames, edit scenes, mix sound effects, and master their craft all on their own, just as a team of director, producer, cinematographer, and actor would do in a production set. Their success stems from the concept of “perfectly imperfect”, as people veer away from overproduced content and artificial storylines. Repetitive beast modes within their platform that remain as an enigma to content marketers present an opportunity to capitalize on their stardom. Media businesses should collaborate with them for unpolished, raw stories in whatever format reimagined. The collaborative era creates revenue opportunities to form multi-channel networks and hone their craft. Understanding that Internet stars doesn’t have to be confined within their niche platforms is the key to unlocking the knowledge that only ubiquitous content can drive synergistic experiences.

The first ever Kalyeserye (translation: Street TV Series) aired on Philippine television “AlDub”, a love team between the young actor Alden Richards and Dubsmash star Maine Mendoza, proves that a simple yet striking story permeates the great wall between traditional storytelling medium and digital platforms like the superpowers of Marvel’s Kitty Pryde. While the iconic Maine Mendoza first became famous on Dubsmash, her raw and relatable charisma revived the popularity of the Philippines’ longest running variety show from obsolete TV to breaking TV ratings. Fandom emerged across all kinds of communities worldwide, from Youtube to Facebook fan pages to print merchandise and breaking Twitter records worldwide with 25.6 million tweets in 24 hours.

Digital as core business, not as a silo.

The painful reality that one day the symbolic broadcasting tower will no longer be in sight looms like a black cloud above TV executives. The future is digital and it is only rational for television executives to make digital their core line of business. Transforming a company into digital takes more than just creating online streaming services to stay relevant in the industry. The heart of core operations need to revolve around content delivery networks (CDN), metadata management (MDM), and digital platform development, previously occupied by broadcast transmissions and linear channel programming. Programs on live linear channels need to be transcoded into high-definition digital format preferably right after airing to sustain momentum. Production teams need to be mindful of shooting scenes where films will eventually be distributed to digital storefronts such as iTunes, or incur additional operating costs in material restoration. It is not as simple as reorganization of a company and forming a digital division that would tend to operate in silo while traditional media is business as usual. Digital has to be integrated in every process and division of the entire company.

Don’t add fuel to the fire.

Piracy remains a big issue, the effects of which eat up CDN operating costs as illegal pirated sites would normally share the same data delivery pipe with legitimate distribution medium. While it is penultimate for networks to ensure the right digital rights management (DRM) measures are in place, the key takeaway from Netflix’ model is to offer content at a reasonable price, as customers will most likely pay for the service than to rip off content. As HBO has shown the world that the way to deal with piracy is to not add more fuel to the fire, piracy offers an effective free marketing that can potentially increase subscriber base and revenue with reduced advertising spend.

With the rate of consumers ditching pay-TV cable subscription in favor of binge-watching and program viewership nosedive to single digit ratings, the reality that TV will be long gone in the next 20 years, as Netflix CEO Reed Hastings famously predicts, is getting imminent by the thread.