The way we view TV is changing. Fifty years ago, American homes had one black and white television set that had fewer channels than months in the year. Flash forward to 2016 and the TV medium has grown exponentially. In this changing environment, two recent trends that have gained media attention are “cord-shaving” and “cord-cutting.” Catchy terms. Cord-shaving can be defined as a consumer stripping down his or her cable package to a bare minimum offering from a cable provider, while cord-cutting is the process of eliminating a cable provider all together and going with a digital alternative such as Over-The-Air (OTA) TV streaming.
While the ‘cutting’ and ‘shaving’ distinction is plain to see, what exactly does ‘cord’ mean? You still need some kind of cord to connect your TV to an alternative streaming option. In the current lingo, the ‘cord’ referred to as being cut or shaved is the cord that connects your TV to monthly cable or satellite subscription.
Here’s Sony’s alternative cord.
In March 2015, Sony Entertainment test-drove its newest addition to the company’s repertoire: PlayStation Vue. PlayStation Vue is a TV streaming service that utilizes an internet connection and IP address to deliver local television channels through the console or streaming device. To compete with the cable companies, PlayStation created four levels of monthly subscriptions:
- Access – 60+ Channels for $39.99/month
- Core – 70+ Channels for $44.99/month
- Elite – 100+ Channels for $54.99/month
- Ultra – Same as Elite + HBO and Showtime for $74.99/month
Each tier builds on the previous package, with the Core and Elite subscriptions including bonus channels such as sports networks (SEC Network, NFL Network) and entertainment channels (IFC, Universal). In addition to the above offerings, Sony has also created a “Slim” version of each package, which cuts the cost of each plan by $10. The tradeoff with the Slim versions is that content on ABC, CBS, FOX, and NBC becomes available the next day through PlayStation’s On-Demand platform, rather than being available live.
According to Bloomberg, Sony has reached over 100,000 subscribers in the year since its beta launch. The subscribers are overwhelmingly millennials. Sony launched an ad campaign for Vue in June of 2016, and has seen a subscriber increase of 15% since then. For businesses looking to target millennials, PlayStation Vue hits the nail on the head.
At this point your question might be, “How exactly do advertisers get involved?” The answer is by buying television inventory directly from Sony. Through Sony, agencies can buy TV in a similar fashion as they would buy broadcast or cable, except it will be shown strictly on the PlayStation Vue TV stream. In their contract with cable networks, Sony has obtained two minutes of every hour as inventory that they are able to sell to clients. The advertisements, spread out evenly per hour in :15 and :30 spots, will replace an advertisement that viewers would normally see through a cable box – two minutes of commercial time reserved for the cable company to insert local commercials. If the inventory does not sell, PlayStation will substitute in-house advertising in its place. Currently, Sony only sells this inventory on a national scale, with the goal that an increased number of subscribers would allow regionally zoned advertising to come into the picture.
In addition to their release of PlayStation Vue, Sony also offers Crackle, a content-streaming service similar to Netflix that offers free digital content to viewers at no cost. Since it is free, however, viewers will see commercials intermittently during a program. This inventory is also sold by Sony and can be tailored to specific demographic or psychographic groups that are tied to a show.
With these offerings taking shape on Sony’s core gaming console, eyes are on Microsoft and Nintendo to see what alternatives they might bring in the future. Currently, Xbox offers an over-the-top internet television service, Sling TV, on their console as well as the ability to use an Xbox One as a cable box. Nintendo, who last year shut down WiiU TVii, has not yet been rumored to be re-entering this space.
While cord-cutting and cord-shaving are certainly occurring, and alternatives to getting video content are being marched out, this still represents a small minority of the television viewing universe. One thing is for certain, though – there will definitely be more options made available to the consumer to watch their favorite shows instead of fewer!