Good morning, and welcome to Protocol Next Up. This week, we’re taking a look back at the year that was in pay TV and streaming. Also: Me, dancing!
But first, some news: This is the last Next Up: Beginning the week of Jan. 3, we will be expanding our entertainment coverage! That means more from me (Janko) and Nick Statt (our gaming reporter) on our site and in your inbox every week. You’ll be getting a brand-new Protocol | Entertainment newsletter arriving on Tuesdays, Thursdays and Fridays, and you can expect us to cover the intersection of new technologies like AR and VR, gaming, streaming and Web3 — and how they’re all coming together to form the metaverse. You don’t have to do anything to receive the new newsletters, but be sure to add email@example.com to your Contacts list. Thanks, and see you next year.
A year of streaming success
Stop me if you heard this one before: Tired of paying too much for cable, people are cutting the cord by the millions. In 2021, just as in previous years, a slow and steady erosion of the pay TV ecosystem continued to take a toll on cable and telco providers.
However, when we look back at the demise of cable 10 years from now, 2021 may still stand out as a year when new cracks in the foundation appeared. Maybe we’ll even recognize that 2021 was fundamentally a post-cable year. Sure, cable still exists, but in many ways, major industry players have already moved on.
Here were some of the big trends of the year:
People continued to abandon the bundle. We won’t know for a few more months how many households cut the cord in 2021, but early estimates indicate that this was another bad year for the traditional pay TV industry.
- At the end of Q3, the top pay TV providers had lost around 5.1 million subscribers year-over-year, Leichtman Research Group estimates.
- “The majority of U.S. households still subscribe to a package of linear networks, but traditional services are slipping toward the symbolic 50% mark,” wrote S&P Kagan analysts in an investor note last month.
- Even including online pay TV services like YouTube TV and Fubo, pay TV household penetration is now below 64%, according to Kagan. In 2010, 89% of households still subscribed to some form of pay TV.
- People aren’t just turning to streaming to get access to TV: 8.5 million over-the-air antennas were sold in the U.S. this year, according to data Scripps Networks recently shared with Protocol.
- The broadcast company estimates that 40 million U.S. households used free over-the-air television this year, and expects that this number will grow to more than 53 million by 2025.
Streaming kept growing, despite a few bumps in the road. We all watched tons of streaming TV while cooped up at home in 2020. Then 2021 came, and surprise! COVID wasn’t done with us.
- 2021 was a bit of a bumpy year for Netflix, which went from blockbuster 2020 results to losing subscribers in North America to a “Squid Game”-powered recovery.
- The company still expects to end the year with 222 million paying subscribers, which is 18 million more than last year.
- Disney+ ended Q3 with 118 million subscribers, compared to around 74 million 12 months earlier. And streaming truly is everywhere: Parks Associates estimates that 80% of U.S. broadband households subscribed to at least one streaming service this year.
Even the industry cut the cord. Consumers have been moving away from pay TV for years. In 2021, they were joined by pretty much the entire TV industry.
- After testing the waters for years, advertisers became serious about putting their money where their audiences are.
- A few TV networks made the jump as well: Robert Rodriguez’s El Rey network was reborn as a streaming-only network in August.
- Scripps-owned Newsy, which previously was distributed on cable, became an over-the-air broadcast and streaming network in October.
Free basic post-cable is here to stay. Turn on any smart TV, and you’re likely just one or two clicks away from a program guide with a lot of very familiar names.
- CNN, CBS, AMC, MTV, IFC and others have launched their own free, ad-supported streaming channels next to newcomers like Pattrn, Loupe and the Bob Ross Channel.
- Save for breaking-news moments, the big names tend to carry slightly different programming than their pay TV siblings.
- However, the overall quality of these free channels has risen significantly just over the past year alone. What used to be a weird and disjointed experience is now solid basic cable territory, complete with cooking, travel and home remodeling shows, sports documentaries and reruns of big blockbuster movies.
- Even the ad breaks are getting better!
In a way, these channels have become a kind of basic post-cable. They feel like cable, but have evolved past cable’s business and distribution models. And that’s what makes them the perfect breakthrough success story of this post-cable year.
“All feels very deja vu.” — Creative Strategies President Carolina Milanesi, responding to news of a growing number of tech and media companies pulling out of CES 2022.
“For the metaverse to develop in a healthy way, it actually needs to be regulated. This new medium will be able to capture more data and influence our minds more deeply than any so far!” — HTC Vive China President Alvin Wang Graylin, calling for regulation of the metaverse before it’s too late.
A MESSAGE FROM NIUM
Payments infrastructure provider Nium is playing a key role in the future of how we pay for items and transfer money. Nium's Chief Revenue Officer Frederick Crosby explains all.
The story of ‘Big Buck Bunny,’ the video industry’s favorite animated short film.
Speaking of pay TV: DirecTV Stream customers will have to pay up to $10 more per month come January.
TikTok may be violating the GPL with its new Live Studio Windows app.
AT&T is selling its Xandr advertising unit to Microsoft. After getting rid of its media businesses, AT&T has no need for programmatic advertising anymore.
Meta’s Supernatural acquisition is facing FTC scrutiny. The probe is slowing down Meta’s plans to spend $400-$500 million on a company previously known as VRSE.
Disney and YouTube TV renewed their carriage agreement. ESPN and other Disney channels are back on YouTube TV after a blackout that lasted less than two days.
China’s top influencer was fined $210 million. Huang Wei’s social media accounts were taken down after she was fined for tax evasion.
Rec Room raised $145 million, and is valued $3.5 billion. Metaverse unicorns are apparently a thing now.
Meta’s AI team recently released a web app that turns children’s drawings into animations. In the spirit of this column, I figured I should try it out myself. Except, I’ve never been a good artist, so I decided to bribe my daughter instead (sure hope I can expense “lots of chocolate”). Behold: This is me, dancing while wearing a Santa hat and some surprisingly stretchy pants …
Thanks for reading! See you next year with our new Protocol | Entertainment newsletter. Until then: Happy holidays if you celebrate, stay safe, and enjoy your break!