Is the reign of cable television coming to an end? The number of subscribers deserting cable TV tells us one thing — this business model is dying. In a study conducted by Leichtman Research Group, the top cable TV companies in the US lost about 290,000 video subscribers in the third quarter of 2017. Inversely, internet media consumption is growing steadily and expected to hit 28% by 2020. This is according to Zenith’s latest media consumption forecast. Furthermore, this study predicts that the gap in the daily consumption of television and internet media will vanish by 2019. Last year’s TV gap advantage was 27 minutes, which was narrowed down further to 13 minutes in 2018. Is this really the time of cable TV dying?
The Rule of TV: From Network Age to Cable TV Era
Television in the US can be described in two distinct eras: the network era and the cable TV era. In the years from the 1950s up to the mid-1980s, television was controlled by the three major networks ABC, CBS, and NBC. During these years, viewers had very few options and had to base their daily activities on the television programming and schedules.
In the 1980s, the cable era—also known as the post-network era—began to flourish. The cable tv era has five defining concepts: choice, control, convenience, customization, and community. All of these point to the viewers’ access to a broader range of content, consumed at their own terms.
For a monthly subscription fee, viewers access traditional broadcast stations, exclusive cable-only channels, and content, and movies. By the end of the decade, nearly 60% of American homes had a cable tv subscription. Additionally, the cable era also gave birth to niche channels. These are cable TV channels devoted to a specific interest in food (Food Network), cartoons (Cartoon Network), comedy (Comedy Central), and documentaries (Discovery Channel).
Netflix: The Pied Piper That Led Us Out of TV Land
The cross-platform era is television’s response to the rise of on-demand streaming. But before television took steps to disrupt itself, Netflix has lead hordes of subscribers out of TV land.
Two software engineers, Reed Hastings and Marc Rudolph. started Netflix in 1997. The model they had in mind was straightforward—use the internet to rent out movies in DVD format. The company adopted the monthly subscription model in 1999. In 2007, with a strong pool of subscribers, Netflix announced the launch of their streaming services. By 2010, Netflix acquired 20 million subscribers. And for the first quarter of 2018, its total worldwide streaming subscribers reached 125 million with more than $11-billion-dollar earnings in 2017.
Netflix definitely has gone a long way since it started in 1997. The company continues to disrupt the entertainment industry’s business models. The streaming giant has also introduced us to award-winning original programs such as House of Cards, Stranger Things, and Orange is the New Black.
Why Subscribers are Making the Switch and Cable is Dying
Cable is dying for many reasons. When it comes to streaming services, consumers now have many options. Besides Netflix, there other great streaming packages offered by Hulu, Amazon Instant Video, and HBO. Subscribers are choosing to switch to online media streaming because of lower cost, the variety of content, and the freedom to choose when and how to access preferred media and content.
Cost has been the primary reason why cable is dying. For as low as $8 per month, subscribers have unlimited access to TV shows, movies, comedy specials, and originals. Cable subscription starts at $50 per month plus up to $7 for broadcast fee, up to $5 for regional sports fee and a host of other additional fees. By switching to streaming services, subscribers can save up to $700 annually. While cable subscriptions provide access to up to 250 channels, 90% of these channels are never accessed.
Most televisions manufactured after 2007 can pick up signals from free TV, and HDTV antennas can be purchased via Amazon for as low as $20. Additionally, there are websites that can help you detect broadcast signals within your area. Consumers have discovered that combining free local TV and streaming services provides a more cost-efficient alternative.
Lastly, more than 70% of American households have internet connectivity. Consumers are realizing that they can get more value from their internet subscription by switching to streaming services.
In a research conducted by SurveyMonkey, cable subscribers stay with their providers because of live sports and news programs. To address this, streaming services allow subscribers to watch TV shows the next day. Most national sports leagues have their own streaming service. Keeping up with the latest in sports is not an issue anymore.
Older TV shows and episodes no longer airing can be accessed via streaming services. This gives the subscribers the flexibility to have reruns of their beloved old TV shows. Additionally, streaming services have been offering high-rated original programs. Netflix’s line-up includes Stranger Things, Black Mirror, and A Series of Unfortunate Events. Amazon has Bosch, Ripper Street, and Transparent, while Hulu offers original series like The Handmaids Tale and Casual.
The ability to access content whenever and wherever gives subscribers more freedom. Most cable companies do not offer access through their phones and smart devices. And this is where online media poses an advantage. According to a 2015 study conducted by Flurry, US consumers are glued to their mobile devices at least five hours per day. With 77% of the American population going online every day, catching up on your favorite TV shows during downtimes is a plus.
What Cable TV Companies Are Doing to Lure Back Subscribers
The numbers are not looking good for traditional television. More subscribers are deciding to switch to online media streaming. But cable TV as a medium is not giving up without a fight. To move with the changing consumers’ media habits, cable TV companies are repositioning themselves by opening other modes of content access besides the little black box and offering more value to their customers.
- Some cable TV companies have branched out to video-on-demand services to allow customers to access their content on smartphones, laptops, and other digital media players. Using IPTV technology, cable companies are able to deliver content to subscribers via multiple platforms and internet at the customer’s convenience.
- Authenticated streaming also known as TV Everywhere is a business model where customers can access content from their channels using internet-based services and mobile apps using their cable subscription.
- Cable TV companies are now moving toward unbundling their packages. As a way to slowly ease in into this business model, AT&T has been offering skinny bundles through DirectTV. Dish has been going the same direction as SlingTV.
- Cable TV companies are working with streaming giants in providing more value to subscribers. Back in 2016, Comcast partnered with Netflix to allow its subscribers access to the streaming giant’s extensive catalog with their Xfinity TV subscription. Likewise, Hulu, Comcast, and Charter Communications are in talks to offer on-demand service.
- Content is still king. Cable TV companies are still betting on the ratings game. This conviction has given us high-rated programs such as Game of Thrones, The Walking Dead, and The Big Bang Theory.
Up until the 1990s, television was at the helm of home entertainment. But as the saying goes, some good things never last. The advent of the internet and mobile technology has ushered in a new age, the multiple-platform era. Television, and cable TV, in particular, is now realizing that it has to share the throne with a new power.