Television has been an important part of our culture since it first went mainstream in the 1950s and 1960s. It made it possible for people to watch shows and movies without having to pay to see them in the theaters, and it gave birth to television news, which is still one of the most relied upon news sources to this day.
However, no matter how entrenched something is in society, it is not immune to disruption from new technologies, and that’s exactly what’s happening to the world of cable TV.
For years, cable companies made billions offering consumers access to cable TV. This meant more channels and better content and left with no other option, many of us signed right up. But now, cable TV is getting prohibitively expensive, and there are many other options out there for consuming content, causing people to “cut the cord” and turn their backs on cable companies forever.
This trend has led many to wonder if cable TV is dead.
It’s a fair question; cable companies have been hemorrhaging customers for the past decade or so. But it’s tough to say if this means it’s really dead.
For example, cable TV use is growing in other parts of the world, and for the moment, cable TV still has access to sports. Yet many other factors indicate the days of cable TV are indeed numbered. We’re going to dig into some of the key statistics to discuss if we are witnessing the end of an era.
Simply put, cord cutting is the process of canceling your pay cable TV subscription. This usually also includes stopping your home phone service as well, choosing instead to rely on our mobile phone. However, to be considered a real cord cutter, you need to ditch cable.
Typically, when people “cut the cord,” they do one of two things:
· Revert to antennae TV. We tend to forget that TV was and has always been free. However, there are only a few free stations to choose from, which is why we all started paying for cable in the first place. But if the basic, local channels are enough for you, then you can cancel cable and get an antenna to receive television for free. This is known as Over the Air (OT) broadcast.
· Switch to streaming services. To be able to maintain a decent level of variety when it comes to entertainment and also save on cable TV costs, many people are opting for Over the Top (OTT) broadcast, which means they get all their television through the internet. Choices include Netflix, Hulu, Apple TV, etc., as well as YouTube TV.
Over the Top broadcast is much more popular than switching to just basic cable, which means we cord cut not because we want to watch less TV but because we want to have a better experience when we’re doing it.
You’ve seen some of the more shocking statistics about cord cutting and pay cable TV subscriptions, but to really show you how this industry is changing, consider the following:
This study by West Monroe surveyed 5,000 Americans and found that 59 percent of them had already cut the cord. However, the research group was quick to point out these numbers are not representative of the entire country but rather its younger generations.
But this just makes the handwriting on the wall even larger since it means the next group of cable consumers, upon which the industry depends for growth, are not interested in paying for cable. And to make matters worse, the study also found that 29 percent of those who hadn’t cut the cord already are thinking about doing so. More bad news for the cable industry.
This number just keeps getting bigger and bigger. As we know, it reached 33 million in 2019, and the industry will lose almost the same amount of customers in the next three years, according to eMarketer.
Overall, though, people are dropping cable at a slower rate than they were a few years back, but we shouldn’t take this as a sign that people are staying loyal to cable. Instead, it’s a reflection on the availability of alternatives.
Netflix has grown tremendously in the past few years, as has Amazon Prime, Hulu YouTube TV, and Apple TV. Over the next few years, consumers will have even more options, but there’s no way to know if that will kill cable. Perhaps having to subscribe to ten different platforms to watch TV will drive people back to cable, or maybe nothing will convince people to go back to cable. Only time will tell.
Cable TV companies are clearly losing customers at a steady rate. But what’s interesting is that there is a growing segment of the US population that has never had cable. Of course, there have always been resisters, but that some 35 million Americans have never paid for cable should be troubling to those working in the industry.
This number is expected to grow to about 40 million in the next few years, which means around 90 million Americans will be using a cordless TV. This does not leave the industry with a lot of room to grow, which could mean we’re at the beginning of the end.
This is perhaps the most concerning statistic of them all for those who are still rooting for cable. It’s one thing to lose subscribers to Netflix and other streaming services, so long as you stay one step ahead of them. However, this stat shows us that this is no longer the case. Netflix has officially surpassed both cable and satellite TV in terms of viewers.
This might not come as a huge surprise – Netflix spends billions of dollars a year to create content to attract new subscribers and keep current ones happy – but it’s a bit shocking when we consider how ubiquitous cable was as compared to Netflix just a few years ago.
Yet another bad sign for the cable industry is that a majority of people now have some type of streaming service. Traditionally, this wasn’t always a problem, as streaming services only provided a limited amount of content, and most of that content was usually previously recorded. However, as more and more streaming services are getting in on the live television game, and as they invest more to create their own content, that so many people have a streaming service will continue to be a problem for cable companies both big and small.
To understand this trend and to get a better idea as to whether or not it means the death of the cable industry, it’s important to consider why people become cord cutters in the first place.
Below are the main reasons people cite for ditching their cable subscriptions in favor of something else:
With 87 percent of people who cut the cord citing price as their reason for doing so, this is far and away the top reason for ditching cable. And for good reason. The average price of a cable TV bill grew 209% between 1995-2015, outpacing inflation by more than 150 percent, and prices have increased by 50 percent just from 2010 until the present.
All of this means that cable TV hasn’t been getting more expensive because everything has been as well. Instead, it’s been getting more expensive because the cable companies have been charging more and more, likely because they saw us as a captive market from which they could extract more money.
As mentioned earlier, very few people, just 34 percent, are happy with the value they receive from their pay-TV subscription, so it’s no wonder so many people are jumping ship and looking for alternatives. However, cable TV companies are smart. They have been working hard to keep prices from rising further. This is likely an attempt to stop people from cutting the cord. Will it work?
Another reason people cut the cord is that they want a better television experience. Streaming allows you to watch what you want when you want. All you need is an internet connection. You can also share accounts with multiple users, which allows people to spread out costs and make television more affordable. Furthermore, streaming services, especially those with live TV options, allow users to record unlimited hours of their favorite TV shows by making use of cloud storage. And to stream, all one needs is a device with an internet connection, such as a phone, laptop, tablet, or television.
All of this beats cable, which limits you to the home and to the TVs/boxes that are hooked up to cable. These limitations are becoming too cumbersome for today’s digital natives, and this is a big reason why so many people are cutting the cord.
As streaming services such as Netflix grew up, the biggest complaint against them was related to their libraries. Because they’ve always had to rely on licensing agreements and other contracts, it’s been a challenge for streaming services to keep up with cable in terms of content. However, in the last few years, Netflix has been investing heavily in content creation, and they’ve been doing so with tremendous success. As a result, people are now able to access the best content out there without needing cable, something that was not true until just a few years ago. And as Netflix continues to develop its original programming, it’s hard to see people switching back to cable just to be able to watch one or two shows.
Now that we’ve had the chance to look at some of the stats about cord cutting and also discuss some of the reasons why people make this decision, it’s time to ask if all this means cable TV is dead.
Below are some of the reasons why we are witnessing the end of the cable TV era, as well as a few things for which the industry can be hopeful.
At the moment, sports might be the only thing keeping cable TV alive. People use cable mainly to watch live broadcasts, and sports are one of the few things people still care about watching live.
However, cable’s dominance in the sports market may change soon. All of the major sports leagues will see their television contracts expire in the next five to ten years, and it’s expected that streaming services, such as Amazon and perhaps even Facebook, will bid to try and get exclusive rights to these leagues. If this happens, and all of a sudden you don’t need cable to watch the NBA or the NFL, then we can almost certainly say goodbye to cable TV forever.
As we’ve mentioned already, people from younger generations are more likely to be cord cutters. They’re used to doing things on the internet, and they are probably not going to have the same attachment to cable as people from older age brackets. And as more and more of the content people desire is available online, there’s only one conclusion to draw: death to cable TV.
Building on this last point, those who are still watching cable are made up mostly of advertisers’ least-desired age brackets. This means that while TV is still a good value for advertisers – they can reach a lot of people for the money they spend – that value will diminish in years to come. This is not good news for cable TV companies, because when advertisers stop spending, stations suffer, and when stations suffer, they disappear, which means cable TV has nothing to offer.
One interesting statistic is that 56 percent of people still watch cable TV because it’s bundled with their broadband internet. Cable companies have long been bundling services as a way to market them as less expensive, but as they realize more and more that their core business is providing internet and not cable, they have been using these bundles as a way to keep people paying for cable.
However, with 5G internet service around the corner, it’s possible people will be able to get fast internet from other sources, and when cable companies see this, they may release people from these bundles to compete and not lose their core business. This would mean cheaper internet for all (yay!), but it would also mean no more cable.
There are some rather convincing reasons as to why cable TV is dying if not already dead, but here are some reasons why it might not be headed for certain death just yet:
Despite all these numbers about all the people who are dropping cable and cutting the cord, recent studies have found that nearly all of those who currently have cable TV service don’t plan on dropping it anytime soon. They cite being used to it, liking having all the channels in one place and needing it to watch the shows they like as the main reasons why they are not considering switching. However, given how many people are cutting the cord every year, it’s fair to wonder if these loyalists are not jumping ship faster than they thought they would.
Another reason why cable TV might not be dead is that it is still growing in many other parts of the world. For example, Eastern Europe, Asia, Africa, and Latin America are all growing markets, largely because these areas of the world are experiencing economic growth, which brings about higher incomes and more buying power. However, as internet use also grows in these parts of the world, it’s fair to suspect that this growth will give way to streaming services before people get too hooked on cable. But then again, we never know.
Is cable TV dead? Probably not completely. However, the days in which cable TV was the primary (and often only) way people watched television and other video content are most certainly gone. Furthermore, as streaming services continue to grow and take over more of the market, cable TV will likely continue to lose popularity amongst consumers across the world.
However, that cable TV is being replaced with streaming TV suggests people aren’t cutting the cord because they are sick of watching television but rather because they want a better, and cheaper, way to do it. So, unless the cable companies adapt to meet these changing needs, it’s safe to say they will soon cease to exist, passing forever into the annals of entertainment history.
