Cbs All Access
Image Source: CBS.

It's been over two years since CBS (NYSE:CBS) launched its over-the-top, OTT, streaming service, CBS All Access. In that time, it's added 1.2 million subscribers, according to a recent report from The Wall Street Journal. That number is up from the 1 million subscribers CBS reported for both All Access and its Showtime OTT service in July.

But CBS has a lofty goal of reaching 8 million subscribers across the two services by 2020, expecting them to be about evenly split. If CBS is going to reach that goal, it needs to accelerate its growth. The slow pace over the last six months -- about 0.4 million net additions per year for All Access -- is concerning, but CBS may just be getting started.

Lots of new programming is on its way

Earlier this month, CBS inked a deal to bring the NFL to All Access. CBS's regular Sunday games and its five Thursday Night Football games throughout the season were a huge hole in All Access's programming. CBS is now able to stream everything its regular broadcast channels offer.

Additionally, CBS is launching several new original series for All Access. It premiered a Big Brother spinoff at the end of September, and plans to launch a new Star Trek series in January. A Good Wife spinoff is also in the works, slated for the spring. CBS is planning the new series launches such that there's always a new episode of something every week. It hopes that will reduce subscriber churn.

CBS also includes the archives of many of its shows from this century and last. In fact, it seems many All Access subscribers are signing up for access to the archives as seventy-five percent of subscribers still pay for traditional cable.

The addition of the NFL and exclusive original programming could broaden All Access's subscriber base to more cord-cutters or cord-shavers. Most households are still able to pick up a strong CBS broadcast signal via a set of rabbit ears, but they won't be able to watch the new Star Trek series without an All Access subscription.

Is CBS cannibalizing its main business?

CBS developed All Access as a tool to leverage against big distributors like Comcast (NASDAQ:CMCSA) and Charter Communications (NASDAQ:CHTR). With another way to distribute its content -- i.e., directly to consumers -- CBS can stay strong at the negotiating table knowing it has All Access to fall back on. That's extremely important, as CBS has a goal of reaching $2 billion in retransmission fees -- the fees cable distributors pay to carry the network -- by 2020.

But Comcast and Charter may see it the other way around. With the availability of All Access, traditional distributors may not need to carry CBS at all. They can offer customers a free year of the service for roughly $70, and it becomes a customer-acquisition cost. That would certainly boost All Access subscribers, but it would come at the cost of its main business. And All Access doesn't have the benefit of long-term contracts with large distributors.

There are roughly 39 million video subscribers between Comcast and Charter. If either dropped the network, it would be a major blow to its plans to increase its retransmission rates. CBS would have to bring in at least one-fourth of those lost subscribers to All Access to recoup the revenue loss, since management says it nets about $8.25 per month per subscriber.

But All Access comes with additional costs over traditional distribution, such as customer management and content delivery. If All Access's path to about 4 million subscribers over the next four years comes with the loss of a big pay-TV customer, it's not great for CBS's bottom line.

Adam Levy has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.