In the US, thousands are swapping their cable subscriptions for CTV equivalents. These services act as a like-for-like replacement for traditional cable channels, delivering many of the same linear channels available on cable, but via the internet instead.
Companies like YouTube TV, FuboTV and Philo have made a success of this model in the US. However in the UK, none of these types of services have had much of an impact.
“There never was a cord to cut”
Nigel Walley, managing director of consultancy company Decipher, maintains that the “cord-cutter” moniker that is used so often in the US is not relevant to a UK audience.
“Most of the people likely to cord-cut in the UK probably didn’t have pay TV to begin with,” Walley said.
Andrew McCollum is CEO of Philo, a US-based live and on-demand CTV service that offers over 60 channels. Cord-cutters are traditionally profiled as millennials or Gen-Z. But McCollum says that Philo’s age demographics reflect that of the US population as a whole, rather than being weighted towards the young.
“Philo is giving you the same TV experience, and it’s doing it better than traditional TV. But fundamentally if you liked watching TV through your cable company, you’re going to like it through Philo even more, because you’re going to get the same content at a lower cost. It’s kind of like TV with superpowers,” McCollum said.
Philo is significantly cheaper than cable TV. The price for a standard Philo plan is $25/month, much lower than what the average cable subscription costs, where consumers can expect prices to start from around $70/month.
In the US, most consumers have a cable TV subscription, and therefore, switching to a service like Philo, YouTube TV or Sling TV makes financial sense. However, Nigel Walley says that the strength of the British free-to-air offering means viewers in the UK do not need these expensive cable subscriptions in the first place.
“Execs from the US are often amazed when they see the strength of the UK’s free-to-air offering,” Walley said.
Mending a “Fractured Experience”
Andrew McCollum says that Philo is setting out to mend what is broken with the TV experience. He outlines two things that he thinks is going wrong with the traditional cable TV experience.
“One is that a lot of people in the US still watch TV through these clunky boxes in their living room with plastic remotes,” he said, “And it’s really expensive, and you’re tied to contracts and to certain devices.”
“Second is that the current model has gotten really fractured. There are so many different services that it’s really hard to keep track of as a consumer,” McCollum added.
Nigel Walley says that the issue of a fragmented ecosystem is more pertinent in the US than in the UK.
“Less consolidation happened in the US, meaning that there are many underfunded poor-quality pay TV providers,” he said.
Walley adds that for many US customers, a switch to CTV away from traditional linear cable services represents an upgrade in terms of quality of content. He argues that CTV services in the UK have less quality content than their American counterparts.
“Services like Netflix are much nearer to being complete platforms in the US than they are over here. These are complimentary services here,” Walley said.
“Cord-cutting” and replacing traditional cable packages with CTV offerings has become increasingly popular in the last few years. Andrew McCollum attributes this to several convergent factors.
“Technologically, there have been a lot of changes that have made this more possible today, not only from broadband being in more homes to. But also, it’s actually quite expensive to operate the services with how much bandwidth these services need. So there’s a big infrastructure challenge to lower the cost of bandwidth to the point where you can economically operate live video streaming services at scale,” he said.
This question of infrastructure is another reason why Nigel Walley doesn’t think we’ll be seeing CTV services replace linear television in the UK anytime soon.
“We still need over the air broadcast to do a lot of the heavy lifting, particularly as the broadcast standard is improved,” Walley said, “Sky in the UK is on a journey to get all their customers on 4k Ultra HD and then eventually 8k. Of course, every time you go up one of those grades, the file size increases dramatically. So it’s very hard to replicate that on the internet in the same way.”
The Power of a UK TV Moment
The received wisdom is that as people sign up for more CTV services, it signifies that the appeal of live TV is diminishing.
Andrew McCollum of Philo says that, while he believes that linear live TV is “a relic of when the TV was literally being broadcast off an antenna on the top of the tallest hill”, he does believe that there is still power in live TV.
“There’s something exciting about knowing that everybody is watching the latest episode at the same time,” he said, “Or if you think about a big sporting event like the Olympics or the World Cup, there’s hundreds of millions of people watching that happen in real time. There’s nothing else we do as humans where so many people engage in the exact same activity at the exact same time.”
Nigel Walley believes the power of live TV moments is one reason that people in the UK will not be trading in traditional linear TV packages for CTV alternatives altogether.
“The US has multiple time zones, whereas the UK has one,” he said, “Broadcasters here are still able to create national moments around scheduled programming.”
Another factor in preventing consumers in the UK from “cord-cutting” may be the TV licence. In order to watch any live TV (or any BBC services on catch-up), viewers are legally required to have a TV licence. Given that this is one of the major costs of traditional linear TV, there’s less of an ability for UK viewers to save money by cutting the cord.