Industry Claims That Cord Cutting Would Be A Fad Aren't Looking So Hot

from the adapt-or-perish dept

Remember when the cable industry used to pretend that cord cutting wasn't real? Or perhaps you remember that once the industry was actually willing to admit it was a real trend, they'd claim it was only something being done by losers living in their parents' basement?

Or perhaps you'll remember the cable and broadcast industry claims that cord cutting was just a temporary phenomenon that would go away once the housing markets stabilized and Millennials started procreating? Or how companies like ESPN routinely claimed that warnings about the trend were an unimportant fiction that should be ignored?

Good times.

While there are still a few sector analysts and executives here and there who'll bizarrely try to downplay one of the biggest trends in TV industry history, the numbers keep making it harder and harder to keep one's head buried a foot below ground. Last year, for example, once again saw one of the highest defection rates of traditional TV subscribers in recent memory. According to Wall Street analysts, the top pay TV providers lost 2.5 million subscribers last year alone:

Ironically the two companies that actually tried to adapt to the cord cutting trend suffered the worst losses. Both AT&T and Dish have launched DirecTV Now and Sling TV, respectively, in a bid to try and at least hoover up a few of these fleeing customers with their own streaming services. That's something to be applauded, especially since huge swaths of the sector have simply responded by doubling down on terrible ideas (from raising rates to fighting against real cable box competition). But even with adaptation, users are still fleeing to other alternatives (Amazon, Hulu, Netflix) instead.

It's not going to be getting any easier for entrenched pay TV providers, especially the ones that stubbornly refuse to compete on price. The streaming market will soon face a new rival in the form of Apple's and Disney's new Disney+ streaming service, which will be the exclusive home of most Star Wars, Marvel, Pixar, and Disney children's' programming:

"The clear implication is that year-over-year subscriber trends for programmers that improved throughout 2018 are set to worsen again in 2019,” Greenfield wrote. The analyst is widely known as bearish on the pay-TV sector, frequently using the hashtag #goodluckbundle in his commentary (as he did in Wednesday’s post). The cord-cutting problem promises to grow even more exacerbated as new subscription-streaming services from Disney (Disney+), WarnerMedia and NBCUniversal hit the market starting later this year. Those will via for consumers’ entertainment dollars against SVOD players like Netflix, Hulu, and Amazon Prime Video."

So if companies like AT&T and Dish are actually trying to adapt to reality, why are they seeing such major departures? Many of these users were on unrealistically cheap discounted promotions intended to drive adoption that ended. And some users were frustrated by the a price hike by AT&T in the wake of its latest megamerger with Time Warner. New streaming companies are also actually good at customer service, something the cable and broadband industry hasn't been able to get a handle on for the better part of a generation.

Between tight margins and an ocean of new arrivals, it's going to be pretty hard for the cable industry to make anywhere near the same profits they were used to during the heyday of cable TV. But that's generally how competition works. And you shouldn't feel too badly for the Comcasts of the world, since their solution will simply be to jack up the cost of broadband, where competition is far weaker. Still, there's a subset of executives who still seem to somehow believe they're owed a permanent position of dominance without having to work for it. That delusion is falling apart more quickly than most of them expected.

Filed Under: cable, cord cutting, over the top, streaming


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  1. identicon
    Anonymous Coward, 22 Feb 2019 @ 2:20am

    Re: Re: Moot Point

    Let me know when specturm gets down to one customer left and let me know how much they have to pay for cable. So I can have a big LOL!!


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