Cable TV's Death By A Thousand Cuts

Written by PTC | Published April 8, 2013

The cable industry for the last few years has been trying desperately, if unconvincingly, to assert that claims of its death have been greatly exaggerated. It’s hard to ignore the fact that more than 80% of Americans are still paying for cable subscriptions. But equally hard to ignore is the fact that each year a growing number of Americans are cutting the cord. It is estimated that by the end of the year another 4.7 million former cable subscribers will have cut the cord, one million more than cut the cord last year. The cable cartel must change its business model or face extinction. A one-size-fits-all business model no longer suits most consumers. We are accustomed to buying our music a la carte, being able to customize our smart phones and gadgets. But cable TV has not kept up the pace. In Sunday’s New York Times, Vikas Bajaj pointed out the cable industry’s role in its own decline: Cable companies have downplayed this threat, though they are at least partly responsible because cable package prices have been rising steadily and increased 3.3 percent in the last 12 months, and consumers are finding that they don’t want to buy bundles of hundreds of channels. Likewise, according to AP’s Ryan Nakashima: Some people have had it with TV. They've had enough of the 100-plus channel universe. They don't like timing their lives around network show schedules. They're tired of $100-plus monthly bills. …Last year, the cable, satellite and telecoms providers added just 46,000 video customers collectively, according to research firm SNL Kagan. That is tiny when compared to the 974,000 new households created last year. While it's still 100.4 million homes, or 84.7 percent of all households, it's down from the peak of 87.3 percent in early 2010. Beyond being unwieldy and not giving consumers enough control over content, the current cable TV model also seems to ignore the economic realities of today. While many families are still struggling to get by, the average annual price hike for cable services is 5%. The rate of increase for cable services far outpaces the rate of inflation. How many consumers can still afford $100 a month for TV? Cable companies could potentially stop the hemorrhage by offering consumers channels on an a la carte basis, but even at that, many consumers would rather pick individual shows than entire channels. As more and more Americans are learning they can live without cable, the momentum is clearly and inevitably against the cable industry.

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