CBS Corp. (NYSE:CBSC) launched CBS All Access over 2 years ago for less than $6 per month. At that time the service live-streamed in selected markets and compared to streaming content providers like Netflix Inc. (NASDAQ:NFLXA) and Hulu, which is jointly owned by The Walt Disney Co. (NYSE:DISD) and others, CBS offered very little impressive programming.
That was then. Now, live station feeds of CBS All Access content are available across almost the entire U.S. including full seasons of shows like NCIS. The network is even set to offer a new edition of Star Trek on the platform and soon, Sunday and Thursday NFL games.
Risk Versus Reward
This philosophy has involved some risk. CBS elected not to join in on AT&T Inc.’s (NYSE:TC) DirecTV Now in November. It has yet to sign a deal with DISH Network Corp.’s (NASDAQ:DISHC) Sling TV and is also not part of Hulu, despite the fact Hulu plans to launch a cable-style streaming package early this year.
So far CBS All Access has about 1.2 million paying subscribers of which 10-15% pay for the $9.99 ad-free option. CBS projects about 4 million paid subscribers by 2020.
Many believe the go-it-alone philosophy of CBS All Access waters down the network’s negotiating leverage. Some cable operators suggest that if CBS won’t play ball, all they have to do is give their subscribers a modestly-priced free year of CBS All Access programming.
Charter Communications Inc. (NASDAQ:CHTRC) and Comcast Corp. (NASDAQ:CMCSAC) are two of the big names that see CBS weakening its position. Others point out that pushing people away from traditional pay-tv could hurt their bottom line as well.
Problems For Streamers
For both consumers who want to become cord-cutters and providers, like CBS that want to attract them, there are still many issues and problems to be resolved before widespread adoption happens.
The problems range from obtaining a quality internet connection, sharing that connection (more equipment), choosing providers and deciding which of a myriad set-top and other devices to use to connect your television to the internet.
It doesn’t take long to sign up for enough of the available services to find yourself spending more as a cord-cutter than you did subscribing to conventional pay TV.
Sorting It All Out
CBS has a lot to sort out. In addition to deciding how it will monetize content, the network has to decide whether it can attract enough subscribers to justify its continuing snub of bigger players.
Then there are the local stations, which currently receive about 10% of CBS All Access subscription fees. Those affiliates are likely to demand a bigger slice of the pie, especially if the service continues to grow and achieve success.