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Over-the-top (OTT) services are biting hard into cable’s subscriber base, but now there’s an affordable way for multichannel video programming distributors (MPVDs) to get those subs back 7/21/2017 8:00 AM Eastern

When it comes to losing cable TV subscribers, the first quarter of 2017 was devastating. According to Leichtman Research Group, Inc. (LRG), the top six U.S. cable MVPDs lost about 410,000 net video subscribers in 1Q 2017, compared to gaining about 10,000 subscribers in 1Q 2016. 

Worse yet, “This marked the first time that the industry has ever had net subscriber losses in the first quarter of a year," said Bruce Leichtman, LRG’s president and principal analyst.

In the same time period, OTT streaming service Netflix gained 1.4 million subscribers domestically, growing its U.S. subscriber base to 50.85 million. Known for its popular original series House of Cards and Orange Is the New Black, Netflix’s U.S. subscriber base has doubled in the last five years, according to a report by Fortune magazine. According to LRG, Netflix now has more U.S. video subscribers than the top six U.S. cable MVPDs, which have over 48.6 million.

That fierce online competition may explain why Comcast spent $39.6 billion over the past six years upgrading its cable network and CPE (consumer-premises equipment) to its proprietary XFINITY X1 (X1) IP-based delivery platform. The X1 platform is designed to deliver traditional cable channels, OTT content, Video on Demand, DVR recordings, internet access and telephone service to subscribers over IP. 

The payoff was substantial: In 2016, Comcast’s subscriber base grew by 160,000, while most MVPDs saw their subscriber bases decline—all thanks to IP-delivered X1 content. By enabling IP distribution, X1 now also features apps, like Netflix and Pandora, directly on the X1 platform, making consumption of content across services easier than ever for viewers.

Of course, smaller Tier 2 and Tier 3 MVPDs cannot likely afford to invest Comcast-sized sums to move into IP. Fortunately, there are affordable IP video solutions that have been adopted by smaller U.S. MVPDs, such as General Communication Inc. (GCI), WOW!, Mediacom Communications, Blue Stream and Vast Broadband, with Evolution Digital’s highly acclaimed and cost-effective offerings: eBOX IP Hybrid Set-Top Box, powered by TiVo, (eBOX) and eVUE-TV IP Video Platform (eVUE-TV). 

Evolution Digital’s solutions give MVPDs the ability to begin the graceful migration to all-IP distribution and move as many or as few of their existing video services to IP carriage as they want (keeping the rest on conventional QAM). eVUE-TV, available on eBOX, offers a deep library of IP Video on Demand content with capability for IP linear, network DVR and Pay-Per-View programming that can be viewed at home or on the go. At the same time, with TiVo’s world-renowned interface and functionalities on eBOX, these MVPDs can offer customers OTT services such as Netflix and Hulu.

“eBOX and eVUE-TV offer so many benefits to Tier 2 and Tier 3 MVPDs,” said Eric Hybertson, Evolution Digital VP of product development. “Both technologies harness the power and economy of IP to let MVPDs deliver more services more economically to their subscribers. Add the fact that IP delivery doesn’t suffer from the tight bandwidth limits that bind QAM—and that the Internet’s capacity keeps increasing substantially year after year—moving to IP is the smart play for Tier 2 and Tier 3 MVPDs to make.”

This is certainly the conclusion of GCI.

This MVPD, which services residents across the state of Alaska, is deploying the eVUE-TV platform and eBOX CPEs to provide GCI subscribers with an integrated selection of traditional cable channels, OTT content and the best Video on Demand and Pay-Per-View content. GCI, through eBOX, offers all of this content as a single point of user contact through eBOX with TiVo’s familiar and easy-to-use interface. Consumers can seamlessly navigate and discover programs through universal search across the entire ecosystem.

The provider is looking forward to leveraging the expertise and ability to provide a low-cost solution “to deliver GCI’s next generation IP Video on Demand service,” said Eric Powelson, GCI senior product manager of video.

Collectively, eBOX and eVUE-TV give mid-sized operators looking to deliver a competitive and robust viewing experience a cost-effective, practical migration path to IP, and the chance to start growing their subscriber bases as larger cable operators have, though without the prohibitive $39.6 billion price tag. 

Managed IP Video Solution for Cable Operators

This short video provides a simple, understandable summary of Evolution Digital’s eBOX and eVUE-TV solutions.

Additional Resources

Migrating to IP Video: How Cable Can Remain Competitive

This white paper explains why cable MVPDs need to move to IP now, what the process entails and how eBOX and eVUE-TV can help.

Understanding the Big Challenges Facing the Cable Industry

This article drills down into the reasons why cable TV is so besieged by OTT and other competing services and how IP delivery can keep cable competitive.

Case Study: Why and How WOW! Internet Cable Phone Is Moving to IP Delivery

This case study examines how adopting IP-enabled delivery can restore a cable MVPD’s competitive edge.

Evolution Digital CEO Chris Egan Explains How IP Can Save Small Cable

A video interview of Egan, recorded by the Denver Business Journal, which labeled Evolution Digital as one of the “Saviors of Small Cable.”