Traditional cable television has been losing customers for years. People cut cable because cables cost a lot of money, more than many other utilities and more than many people are willing to pay.
A review of publicly available data by DecisionData.org found that the average cable package costs $217.42 per month. That’s more than many households pay for other utilities combined, according to the website.
It also notes that cable bundle prices are similar regardless of the size of a household, US News and World Report reported.
Of course, prices can vary wildly, costing a lot less for the first year or two of service. But cable is significantly more expensive than streaming services like Netflix (NFLX) – Get the Netflix, Inc. reportWalt Disney’s (DIS) – Get the Walt Disney Company Report Disney+ and Hulu and a host of others.
Streaming Cable – Hulu Live, Dish Network (COURT) – Obtain Class A report from DISH Network Corporation Sling TV, Alphabets (Google) – Get Alphabet Inc’s Class A report YouTube Live and Fubo (FUBO) – Get fuboTV Inc. report — should be some kind of middle ground alternative.
Streaming cables offer smaller bundles of channels for less money than traditional wired cables. Basic packages cost $35 to $70, with add-ons available that can bring the cost much higher. The idea was for people to ditch their traditional cable subscriptions in favor of an alternative that’s cheaper but still gives them some of their favorite channels live.
That makes sense — but it’s not what actually happened. Streaming cable, like traditional wired cable, has started losing subscribers.
Image Credit: Frederic J. Brown/AFP via Getty Images
Line cutting continues
Cable television had just over 100 million subscribers in the US in 2014. That number has steadily declined since, with 1.95 million Americans cutting the cord in the first quarter of 2022, according to data from the Leichtman Research Group.
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“The largest pay-TV providers now have approximately 74.1 million subscribers – with the seven largest cable companies having approximately 40.5 million video subscribers, other traditional pay-TV services having 26.2 million subscribers, and the top public-reporting internet Delivered (vMVPD) pay-TV services with approximately 7.4 million subscribers,” the research firm said.
That’s a 25% decline for the industry since 2014, a number that’s actually worse because those 7.4 million streaming cable subscribers generally pay a lot less for the service than traditional cable subscribers.
Cable’s losses hit every company Leichtman includes in his Comcast report (CMCSA) – Get Comcast Corporation’s Class A report and charter communications (CHTR) – Retrieve the Charter Communications, Inc. Class A Report – the two biggest players – lost 512,000 and 112,000 subscribers respectively. Satellite providers DirectTV (300,000) and Dish (228,000) also posted losses.
But the biggest concern might be that streaming cable leaders Hulu Live (200,000), Sling TV (234,000), and FuboTV (73,000) also saw subscriber losses. These drops literally challenge the future of the cable bundle.
What does cord cutting mean to you?
Traditional cable forces customers to take bundles of channels. You don’t have to choose which channels you get, and the amount you pay ranges from a few cents to a few dollars for each channel in your package.
This means you may not watch some channels your friend loves, and your friend may not watch your favorites, but each of you subsidizes what the other is watching.
If cable cutting continues – and there’s no reason to believe it won’t – budgets at large cable networks will shrink and smaller ones will not be viable. Some cable networks have, of course, replaced lost revenue with streaming services, but that won’t be possible for every channel.
As fewer people pay for cable, some channels will simply disappear and others will cut back on their programming.
When we finally reach an a la carte world, everyone will pay more per channel (whether subscription or streaming) to get exactly what they want. It’s a possible end to a system that created a lot of choice and a step towards a system where only the strongest players survive.
