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Streaming Services Should Be a Part of Pay TV (Guest Column)

The rapid growth of streaming services like Netflix, Hulu and Amazon has created a two-tier system of content. It’s also created a two-tier system in our living rooms, where traditional cable and broadcast channels are accessed via a set-top box while streaming channels are accessed via a Roku box, never the twain to meet.

That’s unfortunate, because integrating the two competing systems into a single interface may be exactly what the industry needs to survive.

Creating an elegant interface that combines streaming services and pay-TV services, so that Netflix and NBC both live on the same grid, would go a long way towards improving TV’s user experience. It would also benefit all parties, from networks and MVPDs to streaming services. But most of all, it would benefit the consumer.

MVPDs would love to be able to offer popular streaming services like Netflix, Amazon and Hulu to their customers, particularly as promotional devices, much in the way they currently offer HBO and Showtime. (You know, subscribe now and get three months free HBO. Substitute Netflix for HBO and you’ve got a compelling offer.) It’s a great way to create stickiness too, as subscribers are less likely to switch (or cut the cord) if they’re getting everything from the same provider.

Integrating streaming services also gives the MVPDs the perfect opportunity to upgrade their set-top box interfaces, most of which look like they were designed sometime during the Clinton Administration. Whether that integration happens on a traditional set-top box or on a new streaming box, it will go a long way towards helping consumers feel they are getting the quality of service they are paying for.

That’s a huge problem, because as the gap between cost and service widens, consumers feel like they are paying Nordstrom prices for K-Mart service. That perception only helps to amplify the current wave of dissatisfaction with pay-TV–if the user experience was in line with the price point, viewers might be more forgiving of things like overstuffed bundles full of channels they don’t watch.

For the streaming services, the benefits are clear. They’ll get the MVPD’s sales and marketing teams actively selling subscriptions for them, along with additional brand recognition every time an MVPD runs an ad mentioning their name. Integration also solidifies the streaming services position as part of the official television ecosystem, putting them on par with broadcast and cable networks.

Networks will also benefit from streaming integration. Right now, too many viewers fire up their streaming devices and rely on Netflix or Hulu to watch TV for the evening. An integrated program guide would put the network’s offerings in theses viewers line of sight, driving tune-in by making it easier to switch between linear, streaming, VOD and DVR. Similarly, having network shows and streaming shows show up together in search results and on recommendation and “watch lists” allows viewers to think of them as one and the same, rather than two separate entities.

The real winner, however, will be the viewer. Having all their TV options in a single interface is a major plus, especially for viewers who make use of a variety of live and streaming options. Stylish, more personalized interfaces would also be a huge win, turning what’s now a major pain point into an enjoyable and useful experience.

While this may all sound like an analyst’s pipe dream, streaming integration is already starting to happen. Cablevision is selling Hulu directly to its customers and the service is integrated into Cablevision’s program guide. Google Fiber doesn’t sell Netflix, but the service is integrated into the program guide there too. Word has it that Netflix and Hulu are both actively pursuing these sorts of deals, starting with smaller MVPDs and working their way up.

Streaming integration may not fit into Silicon Valley’s “TV Is Dead” narrative, but given that it seems to benefit everyone in the current ecosystem from viewers to networks to the streaming services themselves, that narrative may itself be dead. How’s that for a plot twist.

Alan Wolk is a noted industry analyst and author of “Over The Top. How The Internet Is (Slowly But Surely) Changing The Television Industry”

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