The demise of cable TV has been written about for several years now and while most predictions about what will kill it have come to fruition, cable continues to hang on. So maybe the demise is inevitable, because it seems like the cards are stacked against it, but perhaps the death will be slower than forecasters predict, and that slower time horizon can give cable companies enough time to adapt to the changing landscape and find a way to compete. In this article we discuss the top reasons why cable is faced with these issues.
A Slow Death
Beginning in 2013, cable TV started experiencing a loss of subscribers, and that loss grew wider in 2014. A combination of lower TV viewership because of fewer cable subscribers and other media supplanting cable has the industry at a crossroads. In fact, according to Nielsen ratings, TV viewing has been dropping about 10% per quarter. There are several reasons for this dilemma.
- New competitors have emerged, challenging the legacy systems. Netflix, Inc. (NFLX), Amazon.com, Inc. (AMZN), Sling TV, Crackle, and Sony Corporation (SNE) provide streaming content, replacing the set-top box/TV combination as the only way to view entertainment. According to Netflix, one in two households in the US and Canada has a Netflix subscription, bringing the total subscribers to more than 67 million in North America and over 100 million worldwide, accounting for approximately 12 billion hours of content streamed in 2019.
- Consumers are no longer willing to pay for a plethora of channels that they don’t watch. This antiquated cable model has become usurped by streaming options of getting only what you want to watch, and even those consumers that are still with cable are requesting more targeted, smaller bundles.
- Media companies that own the most sought after content, like ESPN or HBO, have recognized the change in consumer behavior and begun experimenting with offering their own streaming content. While many smaller networks may not have the interest and following that these larger ones do, they are also figuring out ways to get their content into a streaming format, through partnerships. According to BTIG Research, “We won’t see many channels beyond HBO who have the clout and audience to go it alone. But the market will increasingly splinter into skinny bundles available to anyone with an Internet connection. We expect many more to come, targeting different groups and demos, each with a unique way of packaging its networks.”
- The costs of the legacy bundled cable subscriptions had grown so high that consumers are no longer willing to pay and are forgoing cable services all together. Between 1995 and 2005 cable bills increased three times faster than inflation, a highly unsustainable trend.
- Americans are more wired today and prefer the ease and convenience of transitioning between devices like laptops, mobile phones, and wearable (watches) that broadband and wireless connections afford. The data backs up this transition. According to Nielsen, between 2014 and 2018, the percentage of broadband-only households has more than tripled.
The Bottom Line
Minutes spent per month on Internet videos on computers and time-shifted TV increased between 2013 and 2014 while traditional TV was the only medium that lost minutes. Whether it’s the convenience, the lower cost or the more desirable content, a shift in our viewing habits has been changing the way the industry operates. Now the question is will the legacy players be able to adapt before they are pushed out?
FAQs
Cable has already lost so much ground — and so many viewers — to streaming. Culturally, basic-cable shows have basically no relevance anymore, and now these self-devaluations are cratering the value of media companies in a tough economy.
Why are people moving away from cable TV? ›
Rising cable costs and the thousands of options for shows and movies on various streaming services have been key factors in the popularity of cord-cutting. As long as streaming subscriptions are more affordable than cable for the average household, it makes sense to move away from cable.
Why cable TV is becoming obsolete? ›
Consumers are no longer willing to pay for a plethora of channels that they don't watch. This antiquated cable model has become usurped by streaming options of getting only what you want to watch, and even those consumers that are still with cable are requesting more targeted, smaller bundles.
Are cable TV companies losing customers? ›
The traditional cable providers continue to lose customers at a torrid pace, losing 1.7 million customers in the third quarter. Overall, traditional cable providers lost over 18,700 customers every day during the quarter.
What are the main reasons of cable failure? ›
What are the main causes of electrical cable failure?
- Application: If cable selected is not appropriate for the application it is more likely to fail in service. ...
- Mechanical failure: ...
- Degradation of the cable sheath: ...
- Moisture in the insulation: ...
- Heating of cable: ...
- Electrical Overloading: ...
- Rodent attack: ...
- UV exposure:
Nine years ago, pay TV had 94.9 million subscribers. That number is expected to drop to 70 million by the end of 2024, according to Leichtman Research Group. That's a 26% decrease in revenue over nine years.
Why are so many people cutting cable? ›
There are a number of reasons why people are choosing to cut the cord, but the two most common are the high cost of cable TV and the increasing availability of streaming services. Cable TV is expensive. The average American pays about $100 a month for cable, and that's just for basic channels.
What will replace cable TV in the future? ›
Cable TV companies might have no choice but to unbundle packages as they face growing competition from streaming services like Netflix, Hulu, and Amazon Prime. Traditional advertising models become antiquated when media companies shift to subscription-based models.
Is streaming killing cable? ›
Streaming's impact on cable
However, the demise of cable TV is coming sooner than expected, largely due to competition from streaming services. According to Nielsen, this past July, for the first time, TV and cable combined made up less than 50% of total viewership, a record low.
When did cable start to decline? ›
The cable TV business is starting to implode. The decline started in 2014 and is gaining speed. This chart tells it all. Cable's decline has implications for local TV news, as retransmission fees paid by cable providers are a major source of revenue for stations.
“As we move to streaming, that's going away because there's nobody to pay them that,” Wolk said. But the good news for those companies is it will take a while before the cable bundle disappears. Wolk points out that there will still be a 30-40% part of the older population who will hold on to their cable subscription.
Is cable TV in trouble? ›
The report cited cord-cutting as the primary reason for the revenue decline. Furthermore, PwC projects, that by 2027, the number of U.S households with a cable subscription will fall below 50 million with household penetration at only 38%.
Is cable internet becoming obsolete? ›
Cable internet is already well established through a massive network of coaxial cables, so it's not likely to become antiquated any time soon. There are multiple underlying technologies that make DOCSIS able to enhance the quality of cable internet connections.
Is there a future for cable TV? ›
In Nielsen's June 2024 Gauge report, cable totaled a 27.2% share of TV usage, the lowest to date. In June 2023, cable's share had been 30.6% and in June 2021 cable's share numbered 40.1%. Among the reasons most often cited for cost cutting include cost and alternative viewing sources such as streaming.
What is replacing cable TV? ›
Compare the best alternatives to cable
| Streaming services | Starting price* | Number of channels** |
|---|
| DIRECTV | $69.99/mo. | 75-150+ |
| Hulu + Live TV | $76.99/mo. | 75+ |
| fuboTV | $79.99/mo. | 100+ |
| Philo | $25.00/mo. | 70+ |
2 more rowsObviously, cable television isn't going to die overnight. In fact, it's very likely to linger for a long while, perhaps decades. But increasingly, it will be much like the way AOL still has dial-up subscribers.
