About 400,000 households per year cut the cord from their pay-TV services, such as cable or satellite, in favor of watching on-demand content over the Internet, according to research by MoffettNathanson, an independent institutional research firm that tracks telecommunications trends.
Cord cutters (and “cord-nevers”) got a boost with HBO’s announcement that it will offer a streaming subscription service in 2015. One day later, CBS became the first traditional network to announce that they too will offer a streaming subscription service. Consequently, the continually shifting landscape is forcing many apartment firms to look closely at their current community offerings.
While cord cutters are disrupting the traditional cable industry business model, they are also changing the electronic equipment industry. Consumers are demanding televisions and video devices that provide Internet connectivity with seamless, simple and intuitive interfaces for streaming content. Indeed, Leichtman Research Group concludes that nearly half of all U.S. households have at least one television set hooked up to the Internet through devices like Blu-ray players, Roku boxes or Apple TVs.
Moreover, shipments of video streaming devices are forecast to rise 54 percent this year, according to tech research and consultancy firm Strategy Analytics.
Tech and telecom companies are responding to this shift in many ways. Satellite TV provider Dish has plans to launch a new Internet TV Service; Google, Amazon and Apple continue to battle for streaming supremacy; and Verizon acquired Intel’s OnCue Internet TV service early this year.
“The line between video and cable is fading,” says Greg McDonald, director of telecommunications for Greystar Real Estate Partners.
And it’s not that people are watching TV less. “It’s that they are getting their content in a different way,” observes McDonald. “So [apartment developers] need to be able to provide enough bandwidth to satisfy the property’s needs, today and later.”
There are few spaces within the multifamily industry where this phenomenon is playing out more prevalently than in the student housing sector. Already many student housing providers are making 1 gigabyte high-speed Internet standard in their communities and others are reassessing the value of wiring for traditional TV service at all.
Andrew Marshall, CIO and chief management officer for Campus Apartments, for one, says his company is increasingly less likely to wire its student housing communities for pay TV. Campus Apartments also unbundles its service contracts so that it doesn’t get locked in with one provider that can’t deliver the bandwidth capacity its buildings might need in the future. (Typically, Campus plans its apartments to be able to handle 20 devices per resident.)
Even with these upgrades and changes, Marshall points out that technology still lags consumer expectations. Delivering video programming over the Internet is still “a horrible broadcast system,” he asserts, partly because a multicast platform, which individualizes reception, “hasn’t really been adopted yet. So, everyone is receiving everything all the time. In an apartment environment, that’s a lot of bandwidth, and much of it gets wasted.”
Both Marshall and McDonald also agree that wireless technology isn’t the answer, yet, either, particularly in an apartment environment where reception can be poor. One solution-a Distributed Antenna System, or DAS, that strengthens weak reception spots in a building-remains prohibitively expensive, says McDonald.
However, as more people become cord cutters-or cord “nevers,” as the case may be-McDonald believes more homes and apartment buildings will be wired so that TVs can be connected closer to fiber optics, as opposed to today’s set up where the fiber stops at the street and coaxial cable handles the transmission from there.
Leading multifamily executives will have more to say on this subject at the panel discussion, “Conscious Unbundling: How Cord Cutters are Impacting Apartments,” on Tuesday, Nov. 18 at 4:30 p.m. during the 2014 NHMC OpTech Conference & Exposition. The annual event will be held Nov. 17-19, 2014, at the Hilton Orlando Bonnet Creek Hotel in Orlando, Fla.
Article written by John Caulfield on behalf of NMHC.
- NMHC and NAA Lead Real Estate Coalition Against FCC OTARD Expansion
- NMHC June 2019 Comments to FCC Regarding OTARD
- FCC Issues Proposed Rule to Expand Wireless Infrastructure Deployment
- House Votes to Restore Obama-Era Net Neutrality Protections
- In Setback for Real Estate Industry, FCC Committee Approves Broadband Model State Code