Five Reasons Cable is Losing Subscribers – and will lose more

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Cable is losing subscribers. Publicly reported data from Comcast, the biggest cable operator in the US,  shows the following:

Period           Video Subs

Q1/2010          23,477,000
Q4/2011          22,343,000

change:               – 1,134,000   ( -4.8%)

There is some debate about the cause  and whether or not this will be a long term trend. But we think cord cutting will continue and here are the top five reasons we see:

1. Economic Cord Cutting

The current recession has been a long one and  and the unemployment rate of 8.2% (March 2012) has had an impact.  A monthly cable bill of $100+   is definitely one of the discretionary expenses that can be eliminated when times are tough.

2. Techy Cord Cutters

This is the second category of cord cutting. Do you enjoy the challenge of connecting an antenna,  a Roku, a Boxee, and your PC all simultaneously while juggling  4 remotes? Not because your cheap but because you like the idea of circumventing the established methods. Well then your a techy cord cutter, a pioneer that is helping blaze the trail.

3. Cord Nevers

A cord never is just that: someone who has never paid for a TV subscription. This next generation  may have come from a cable TV household but also grew up in an internet based video culture, preferring Hulu over television. An oft cited  report  by Credit Suisse analyst Stefan Anninger warns of pending doom for the industry due to cord nevers.

4. Competition

Netflix has certainly had the biggest impact on this movement. At $8.00 a month Netflix Instant streaming has provided an attractive alternative for those in the first two categories of cord cutters. Another model to watch is Aereo, currently available only in NYC for $12 month. Aereo is under legal attack, but if it survives long enough it might disrupt the current model.

5. The future and Disintermediation

Today’s current cable model consists of a dedicated path (coax and fiber) which connects your home to a satellite/antenna system at a master “headend”.  But as broadband speeds and mobile (4G/LTE) improve that dedicated line can be circumvented by any content provider willing to sell you a package. That is already happening with Amazon, Hulu and Netflix. Comcast may sell you the high speed pipe, but you won’t need them for anything more than that. Or perhaps you will upgrade your Sprint phone to unlimited 4G and watch that way.

This disintermediation of the internet has had a profound effect on many business models, removing middlemen, from  music distribution, travel and real estate just to name a few. It is only a matter of time before the dedicated line to your local multi-channel content provider is a thing of the past.


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5 Responses to Five Reasons Cable is Losing Subscribers – and will lose more

  1. Ryan says:

    Great post! I think a lot of non cord-cutters ask the question of “why” and this post does a great job of explaining it.

  2. Bob Smith says:

    With a large amount of sports that I tend to watch live, I don’t believe the internet streams ESPN unless you’re subscribed to a service. Most sporting events or even TV shows wouldn’t be available even online if it wasn’t for the pay TV industry anyway, because that’s what they’re created for. I do prefer to use my employee subscription to DISH where I can enjoy all my shows and sports right away. That seems reasonable enough to me because I’m not patient enough to wait for my favorite shows to go online for streaming, or watch my live sporting events that I need my satellite service for.

  3. dan says:

    I would love to cut the cord, but how would NY son watch his NBA games? Also, my internet price goes up once I cancel TV service.

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