The Demise of Cable Television?

From "Cable Subscribers Flee, But Is Internet to Blame?"

"..........TV subscribers are ditching their cable companies at an ever faster rate in the past few months, and many of them aren't signing up with a satellite or phone competitor instead.


Their willingness to simply go without pay television could be a sign that Internet TV services such as Netflix and Hulu are finally starting to entice people to cancel cable, though company executives say the weak economy and housing market are to blame............

Third-quarter results reported this week by major cable and satellite TV companies show major losses, but don't settle the question of what's causing them.


If "cord-cutting" in favor of Internet video is finally taking hold, that has wide-ranging implications. Consumers who use the Internet to get their movies and TV shows bypass not just the cable companies, but the cable networks that produce the content. The move could have the same disruptive effect on the TV and movie industries as digital downloads have already had on music........................................"

Is Internet to Blame?

This trend coincides with a very sluggish economy, thus rendering it difficult to pinpoint the cause of "cord cutting". Are tv subscribers turning to internet video streaming or they simply can't afford cable TV bills these days.

Time Warner Cable Inc.'s chief operating officer, Landel Hobbs, said the company does not see evidence of people dropping cable in favor of the Internet. First, the biggest subscriber losses have been occuring for people who do not already have high-speed internet without which online video streaming is impossible. They either have switched to satellite or giving up paid TV channels. Second, college students who are viewed as more high-tech savvy, and more inclined to switch to online TV, have not shown a drop rate that is out of line with previous years.

Meanwhile, there are a couple of hurdles to overcome before online video streaming can take over cable TV/satellite like cell phones taking over landlines 5-6 years ago. First, hooking up computer or game console or other devices to get internet video content streaming as easily as a switch of a button on the remote control may seem like a piece of cake to high-tech savvy people but not others. Second, or more importantly, TV fans find content on internet very limited. For example, there is not a lot of life sports on TV yet. Content providers like Walt Disney and Newscorp currently make billions of dollar from cable TV. 6 content providers carry 85% of the content viewed by the nation. They are unlikely to give it up easily to internet providers who are unlikely to pay the same amount of fees. There will be a battle between content provider and internet providers. Until they iron out these differences, cable TV may catch a breather.

However, I think this will not be a long breather.

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