Will Mobile And Second-Screen Viewing Be The End Of Cable?

Michael Teague  |

To say that mobile devices have become a staple in everyday life would be an understatement. Indeed, even though mobile technology is still relatively new, most of us would not know what we would do without our smartphones or tablets.

As anyone who reads the financial press knows, mobile devices have also brought with them a whole new media economy that is disrupting older business models. This can be observed within the tech industry itself, as it becomes increasingly clear that a relevant and successful mobile strategy is the dividing line between the more “traditional” PC and hardware companies such as Intel (INTC) , Hewlett-Packard (HPQ) and Microsoft (MSFT) and the newer tech firms like Google (GOOG) , Samsung (SSNLF) , and even Amazon.com (AMZN) , with Apple (AAPL) , as the company responsible for propelling the market to its current state, being an obvious exception.

But the older tech companies and the tech industry as a whole are, of course, not the only victims of this shifting landscape, as the new parameters that mobile devices have brought with them have also upset the way business is done in the broadcast and cable television industries. While the television business has already experienced a fundamental transformation as a result of the rise of the internet, tablets and smartphones have added a new layer of complexity by allowing consumers to bring their media with them wherever they go.

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Cable TV providers have had to seriously rethink their business strategies, as consumers are depending more on 3G and 4G wireless connections to access content and as the computer and the television screens become increasingly indistinguishable. Indeed, as the Wall Street Journal reported last year, since 2010, pay-TV companies have experienced a decline in subscribers during at least five different fiscal quarters. To put this in perspective, the pay-TV industry had never experienced a decline in subscriptions prior to 2010 (perhaps not coincidentally, the year Apple released the iPad).

That the cable television industry sees this situation as somewhat of an existential crisis was most recently on display during the protracted bidding war that took place between Dish Network (DISH), Sprint Nextel (S), Clearwire (CLWR), and Japanese telecom firm SoftBank (SFTBY). Dish, of course, lost the bitter contest over ownership of Sprint and Clearwire, whose combined access to the domestic wireless spectrum would have provided the cable company with a strong foothold in the lucrative provision of mobile services. Dish has since sought a deal with T-Mobile USA (TMUS).

But broadcast and cable TV companies are being challenged by mobile on the technological level as well. The phenomenon of second-screen viewing is one that advertisers are increasingly paying attention to, and could place new demands on the creation and provision of content.

In the broader sense, second-screen viewing is simply multi-tasking; a viewer uses a mobile device while watching television. But in the narrower sense, second-screen viewing means that the viewer is using his or her mobile device to enhance the television viewing experience.

Second-screen apps use audio-recognition and digital fingerprints to give the viewer specific information at appropriate points during the program. Since Grey’s Anatomy released the first second-screen sync app in 2011, dozens of shows have followed suit. Another example of the possibilities of second-screen viewing began with the Oscars in 2011, when viewers could access different camera angles and behind-the-scenes footage on their mobile devices while watching the broadcast of the event on television.

A ComScore report for last year found that 17 percent of Americans identify themselves as “multi-screen” TV-viewers, a number that is likely to grow as more consumers purchase more devices. And this is not only a challenge to content providers, it could signal a threat to cable TV providers as the increasing reliance on streaming content shifts more people away from increasingly costly cable television plans.

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