Q. I really liked your article on the tough times that satellite TV is having. But I was wondering whether you think cable TV is in the same trouble. With people cutting the cord, is cable TV more or less dead now? — Ron, Milwaukee.
Ron, cable TV operators such as Comcast and Charter are also losing video subscribers due to cord-cutting and other reasons. In fact, they’ve been losing them for a longer period of time than satellite. Comcast, for instance, has lost around three million video customers in less than 10 years.
The major reason for the subscriber defections is the same as it is for satellite TV operators such as DIRECTV and Dish. Consumers are fed up with the pay TV services raising their bills every year, particularly with most annual increases exceeding the inflation rate.
Using Comcast as an example again, the nation’s largest cable operator has raised its ‘Broadcast TV’ and ‘Regional Sports” fees by a whopping 288 percent in just four years. (The two fees combined have increased from $4.25 a month in 2015 to $16.50 a month, effective next month.)
While the pay TV ops have some justification in raising bills (programmers have dramatically raised their fees to carry their channels), the average consumer doesn’t care. He just sees those rising bills.
AT&T, which owns DIRECTV, has signaled that the days of satellite TV are numbered with the company planning to switch to all-streaming as soon as possible. (The transformation may take years to accomplish, however.) The telco is aggressively launching streaming services, such as DIRECTV Now, to accomplish that goal.
Dish appears headed that way as well with the 2015 launch of Sling TV, the leading live streaming service with more than two million subscribers.
Both AT&T and Dish believe they can keep subscriber prices lower with the streaming model due to lower cost for infrastructure and related expenses. That in turn will slow subscriber losses, or so goes the theory.
So, you ask, will cable TV have to take this route, too?
Not necessarily. Cable companies are in a different position because they also provide a indispensable little thing called the Internet. (Except in limited markets, the satellite TV operators do not provide Internet service.)
While consumers don’t like rising video prices, they are more likely to keep paying in the coming years because the cable ops bundle TV with Internet service. (The bundle usually is a good value because adding video to Internet service is less expensive than buying it separately.)
This gives the cable services more flexibility in determining how, when and if to switch to less expensive methods such as streaming. Sure, they will likely continue losing video subscribers, but the losses will be smaller than for satellite, and the revenue loss will be offset by the rise in Internet revenue.
Bottom line: Cable TV companies are not dead, or even dying. They are just evolving.
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— Phillip Swann
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