Cable TV Will Take Hybrid Strategy to Make Transition to Streaming

At this point, it is likely a “no brainer” to argue that incumbent providers of subscription TV will have to follow one clear near term strategy, and a different long term strategy. Sound advice for any business in the midst of fundamental technology change is to adopt a “hybrid” strategy, for a time, while preparing for a different future.

Decades ago, U.S. cable TV operators opted for just such a hybrid strategy when shifting to the hybrid fiber coax network architecture.

Now Comcast is on the cusp of signaling a profound shift to all-optical access with its move to make 2-Gbps all-fiber connections available to 18 million of its present customers.

To be sure, Comcast also is moving to make gigabit access services available to nearly all its 21 million customers by perhaps the end of 2016. Comcast probably will be able to provide 1-Gbps services on its existing HFC network.

But the end is in sight.

Where it comes to subscription TV, expect Comcast and other U.S. cable TV operators to use that same strategy, grafting more streaming features onto its existing linear service.

Over the top (OTT) video continues its strong growth, and should see around 26 percent total revenue growth in 2015, with 24 percent compound annual growth rates through 2019, according to ABI Research.

“Comparatively high priced pay TV bundles are losing customers to more inexpensive, IP-delivered content,” says Eric Abbruzzese, Research Analyst.

The other tack is to mimic the “lower price” feature of many OTT video subscription services by creating skinny bundles that cost less.

With a little luck, such strategies will allow more time for transition to a full, streaming only future.

Cable TV operators have used that hybrid approach before.