Between rising cable costs and dwindling interest in some cable programming, a growing number of cable television subscribers are opting out of their cable video services in favor of on-demand streaming options. In response, some program providers, including CBS, HBO, Verizon and Starz, have announced their intent to offer Internet streaming options, allowing viewers to access their content without cable subscription service.
This shift has significant implications for apartment firms. As more residents become so-called cord cutters, demand for cable connectivity could decrease while demand for data services and bandwidth could skyrocket. Data usage alone has increased 443 percent in the past five years, with the vast majority of the increase attributable to video content. Consequently, many apartment firms are in the process of evaluating cable agreements as well as wiring needs in their communities.
“We’re in the Napster days of TV now,” said Matt Paschick, president of National WiFi, during a session at the 2014 NMHC OpTech Conference & Exposition. “We are going to transition to the iTunes days, but what that looks like yet hasn’t been defined. As an [apartment] owner, I’d be spending more time focusing on the data side rather than video side of any [cable] arrangement.”
Greg McDonald, director of telecommunications for Greystar Real Estate Partners, said it’s important for apartment firms to also focus on the infrastructure supporting the technology. “It’s easy to say we don’t need Cat 5 or 6 cable because we have coax for video,” he said. “But down the road, you might need that. The ‘gadget generation’ will want to use these services and, if you can’t deliver, you are going to find you’re cutting sheetrock or falling behind.”
Paschick agreed, adding, “The more time you spend on the infrastructure as you build the property, the more flexibility you have. It all comes down to CAPEX. If you plan accordingly, this allows any number of providers to come into your property easily, so the bids will get more competitive.”
While these developments are forcing apartment companies to re-evaluate their residents’ data needs and likely create bandwidth issues, experts don’t see these trends as signaling the end of cable companies. “Cable companies are going to evolve,” said McDonald, “And they will be around ten years from now.”
However, how quickly they will have to adapt will depend on the success of companies’ decisions to offer streaming service, as well as what direction sports programming takes. If ESPN, for example, follows CBS, changes could happen sooner rather than later.
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