In a sign of the times — and particular, how completely the rise of streaming services has upended the traditional cable television marketplace — local telecommunications provider DirectLink announced Monday that it will shut down all video offerings from its service by the end of January.
DirectLink is also ceasing activation of new TV subscriptions, effective immediately. The company had informed video subscribers that it was leaving the TV business by regular mail last week.
The company has been in the TV industry for nearly 40 years, having begun offering traditional cable video services in 1984 and moved to an IPTV service in 2006, then to an app-based environment in 2013, with a reboot in 2018.
The organization currently has two active television services: a more traditional Internet Protocol TV service (IPTV) and an app-based product called EZVideo. Both will be turned off early next year.
“This was not an easy decision,” said DirectLink President Paul Hauer. “We know that TV is a personal choice. But the steep rise of programming costs, the impact on internal resources, a growing pool of alternative TV options in the market today and equipment beyond the end of its lifecycle were the key factors.”
The company cited steep price hikes from content providers year over year as a primary factor in the decision. Industrywide, television broadcast retransmission fees have increased from $2.4 billion in 2012 to a projected $11.8 billion in 2022 — an almost 400% increase in 10 years.
DirectLink has seen significant rate hikes from both technology partners as well as local and network content providers already this year — all of these rate increases end up being passed on to local subscribers.
“The continued, unnegotiable price increases from vendor partners and networks do not allow DirectLink to provide video services for members at reasonable rates,” the company said in a press release. “Though the company pools negotiations with hundreds of independent providers throughout the United States, they still lack the weight of the larger carriers to be as successful in keeping rate increases minimal and end-user prices tolerable.”
Muddying the waters further, numerous networks have launched their own apps and streaming services in recent years that provide content directly to consumers — such as like Peacock, ESPN+, and Disney+ — and TV industry insiders expect this trend will only continue.
Other data indicate that consumers are increasingly getting their TV and video content from sources other than cable, with 27% of U.S. households expected to cut cable TV in 2021, and another 40% predicted to do so by 2025.
It came down to a crowded, hyper-competitive marketplace, one in which DirectLink felt it was increasingly unable to compete with the likes of streaming giants like Netflix, Hulu and Amazon Prime.
“We are a member-focused cooperative business model,” Hauer said. “Ultimately, we needed to do what was best for the longevity of the cooperative.”
And that did not include, DirectLink decided, “continually pouring money into a service that, frankly, while it is a great product we’re proud of, others can offer less expensively with a wider selection of content and packages.”
DirectLink says it will help subscribers find alternative entertainment options that work best for their needs prior to the shutoff date.
Exiting the video business will allow internal cooperative resources to be funneled into the support and enhancement of DirectLink’s remaining signature services: fiber optic Internet and voice services for both business and residential needs.
“Internet connectivity is the future and Internet service is DirectLink’s signature product,” DirectLink said. “Turning the company focus onto our well-regarded, reliable internet service and fiber optic deployment will ultimately enhance the members’ video experience because, chances are, they are already watching other streaming content using a broadband connection.”
Deep Dive into DirectLink’s Channel-Surfing History
The DirectLink IPTV product launched in 2006 and the following year was named one of the FierceIPTV’s national “Fierce 15” list, recognizing it as a leader in the field in the advancement and deployment of IPTV.
The equipment that houses the IPTV service has reached end-of-life and replacing this traditional TV offering is costly. Video consumption as a whole had begun to dynamically shift to an all app-based video environment.
The company informed subscribers in late 2019 the intent to discontinue the IPTV service at the end of 2020 in order to focus on its new app-based EZVideo TV product. It later delayed the turn-down so as not to incur another hardship on members during the pandemic.
The first iteration of the EZVideo service began in 2013 and won the national TelcoVision “Service Provider of the Year” award shortly after launch. This first-of-its-kind product provided live, local broadcast television using proprietary, adaptive streaming technology to deliver HD quality programming to DirectLink members.
This initial app worked exclusively on the Roku platform and included an array of live, local broadcast channels. The product was developed almost entirely in house by local DirectLink staff.
It was the first product in the nation to stream live, local broadcast TV channels on a Roku device at a budget-friendly rate. The product was renamed EZVideo Classic in 2018 to avoid confusion from the second release of the app in the same year.
The second and current evolution of EZVideo launched in February of 2018. DirectLink partnered with an app developer who worked with over 120 companies throughout the U.S., including well-known national TV providers like T-Mobile. They had a solid reputation for success in the industry.
The partnership with DirectLink was the developer’s second deployment in the nation of a new IP-based, app-powered platform that enabled video distributors to deliver content to smartphones, tablets and an abundance of TV-connected streaming devices like Amazon Fire, Apple TV, and Android.
This product also garnered national attention and was the showcase app demonstrated by the developer on multiple occasions. DirectLink produced a robust subscriber welcome kit to help people become more comfortable with this new way to watch television.
The marketing collateral piqued interest among US industry peers who utilized the platform and was frequently requested for duplication. The developer filed Chapter 11 bankruptcy earlier this year.
The new owners have restructured the company and instigated significant, immediate rate increases in order to continue providing the service.
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