These days people are contemplating life without cable TV, and, with increasing regularity, are cutting the cord. In 2013, the cable industry suffered its worst year ever, with over five million subscribers turning in their cable boxes and closing their accounts.
Is this a sea change for television and a turning point for the cable industry? It’s surely looking that way.
Consumers are focusing on value, and increasingly, movies and television shows are becoming commodities, like music, apps, and games. Helping drive this trend, technology companies are offering inexpensive Internet-driven set-top boxes with rich entertainment portfolios.
Why pay the cable companies $100 and up per month, when a $99 Apple TV with iTunes, Hulu Plus, Netflix, and other “channels” provide a robust entertainment package at a fraction of the cost.
With iTunes or Amazon On-Demand, viewers can rent or buy the latest videos. Netflix streaming or Amazon Prime provide huge libraries of older movies and TV series, and lately are even delivering original programming garnering widespread acclaim. Hulu Plus, owned by a consortium of networks, provides many of the latest network series available for streaming. While CBS is a Hulu holdout, it offers much of its programming at CBS.com.
Still, a few categories, such as live sports and pay channels (HBO, Cinemax, Starz, and Showtime) remain available only on cable TV. For many viewers, these are the options that keep them bound to cable.
However, even those differentiators are eroding. The NFL has started streaming live games over the Internet. Baseball, hockey, and soccer have “apps” or “channels” that are available on smartphones, tablets and other Internet-enabled devices. HBO, Cinemax, and Showtime offer apps that are available on those same devices. For now, you still need a cable subscription (or a friend’s password) to access these apps, but it would be very easy to flip a switch and offer these channels to any and all paying customers.
So, in many cases, consumers do have to pay to access programming on the Internet, but they are doing so on their own terms, rather than paying, on a monthly basis, for 500 channels they don’t watch. (We won’t spend much time discussing people who use torrents to download content. Suffice to say this is not a legal option, although proponents would argue that those greedy media companies deserve it…and the price can’t be beat.)
In the wake of massive disruption to its business, the cable industry is not standing still. Cable companies are continuing to build out their Internet infrastructure, and heavily promoting their network speeds. They are establishing social networking presences, and offering apps to access programming on smartphones and tablets. Comcast bought NBC, and is competing with Charter to buy Time Warner.
So we are seeing cable providers attempting to polish their images, becoming television producers and erstwhile supporters of Internet programming, and consolidating. But they still want you to pay the monthly nut for a bunch of channels you don’t watch.
These efforts appear a bit desperate. When all is said and done, they point to a shrinking core business. The cable companies have the look of dinosaurs: massive, unwieldy creatures being outflanked by faster, nimbler, out-of-the-box thinkers who are listening to the market and delivering solutions that are more compelling and offer better value.
When the floodgates open, and content owners start delivering first-run movies, sports, and television series to Netflix, Apple, Amazon, Crackle, and YouTube, cable TV will almost certainly wither and die.
Another ominous sign for the cable companies: of those 5 million subscribers lost in 2013, approximately 10 percent were people dropping their Internet service.
To these consumers, Internet service from the cable company is just too expensive. When they must get online, they can do so at the library, at work, or through their mobile providers.
And while we’re talking about mobile providers, here’s yet another growing concern for cable companies. Mobile networks can provide the full litany of digital entertainment and Internet services, so why bother with the cable company?
Things seem grim for the cable companies, and many people won’t be the least bit sorry to see them go, especially as better and more cost-effective alternatives continue to emerge. The most telling sign of the cable industry’s decline: When was the last time you heard someone praise their cable company?
Next week, we’ll talk about life after cable. Where is technology taking us, and what is the ideal television experience?