Documentary Business

Peter Hamilton Consultants, Inc

U.S. Cable Channels Forecast: Dark Clouds With Silver Linings. Takeaways

Industry analyst SNL Kagan forecasts a big decline in U.S. multichannel video subscriber homes:

  • 2015: 98.1 million.
  • 2027: 77.4 million.
  • That’s down 21%.
  • There are 119.6 million U.S. TV Homes  today.

SVOD Expands:

  • According to SNL Kagan the online video subscriber base will expand to 94.6 million homes from around 80 million today.
  • The SVOD category is led by Netflix and Amazon, followed by Hulu.
  • These are supplemented by an expanding buffet of niche services, including documentary specialists like CuriosityStream.
  • Many consumers subscribe to multiple SVOD services, as well as to a multichannel package from their cable operator.

Revenue Implications

  • Most channels will lose revenues as their subscriber counts fall, though these losses are partially offset by annual increases in long-term distribution contracts.
  • Because their reach is contracting, channels will also lose ad revenues even if their ratings are steady.

Silver Lining?

  • Media buyers and brands are pushing back against the Wild West of online advertising.
  • Analysts see a return to broadcast and cable networks that offer larger scale than mobile and online video, and that are also properly verified and increasingly addressable.
  • Read “Will Data Resurrect TV?” by leading analyst Ed DeNicola.


Downhill is not Sunset

  • Cable isn’t falling off a cliff like the CD or newspaper businesses in recent decades.
  • The cable operators enjoy a ‘Triple Play’ business model that packages their costly video product with highly profitable Internet and Telephone services.
  • Operators will need lots of channels for the foreseeable future. And channels always need new programs.
  • Combined, the channels will continue to spend billions on nonfiction programming.
  • They will regularly refresh their lists of go-to producers.

Scale Will Still Matter:

  • The U.S. will remain the #2 largest cable market worldwide after China.
  • Its 77 million subscribers are desirable, wealthy consumers by global standards.

Regular Haircuts

  • Declining advertising and subscriber revenues will force most networks to trim programming expenses.
  • Channels will be driven to find economies in headcount and in the production budgets of their suppliers.
  • There will be more defensive consolidations like the recent Discovery / Scripps deal.

Skinny Bundles

  • Many of 2027’s projected 77.4 million multichannel subscribers will have adopted “skinny bundles” that offer them their most preferred channels, dropping the marginal ones.
  • The skinny bundle trend will force many marginal channels to go online or close.

SVOD Shrinks The Ecosystem

  • SVOD won’t replace these rolling cutbacks in the channels’ program pipelines and expenditures.
  • The SVOD model features a handful of promotable documentaries and factual series that are supplemented by acquisitions of completed programs.

Back to the ‘Eighties + ‘Nineties

  • Many channels are turning from Reality-based schedules by commissioning the classic factual programs that built their brands in the first place.
  • To contain costs, U.S. programmers are taking a 2nd look at co-productions and acquisitions.
  • This is potentially good news for the well-funded European public broadcasters, their producers and distributors.
  • The shrinking U.S. cable/satellite audience also gives a good look for PBS, which is fully distributed, and earns audiences that may be older, but whose scale is the envy of most factual cable channels.

“All Tentpole / No Tent.”

  • Program execs are beginning to pay more attention to the artisans who create affordable programs that attract viewers and then deliver them from one hour to the next.
  • My next post covers the shifting balance betwen auteurs and artisans.


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