Cable TV's Decline: Two Views

There have been a number of articles lately about people cutting costs by cancelling /cutting cable TV service. That's certainly true, but it is more structural than that. Many people are coming to the correct conclusion that in the age of Hulu, Boxee, Bittorrent, etc., that cable TV is an over-priced relic of another entertainment age. While some broadband providers have stakes in such services, the transition is neither going to be costless nor smooth -- doubly so in the current economy.

Here is a quick graph of Google search trends for "cancel cable" over the last few years. It is, as we say in the business, up and to the right.

A note from a reader in the consumer electronics industry who begs to differ, at least a little, with the "cable TV decline" hypothesis:

The classic home entertainment in a recession seems to be playing out so far. FPTV prices actually went up after the super bowl and it turns out … that the Best Buy's of the world jacked prices on low end BD players as they were running low on stock over the holidays - the CE OEMs underestimated demand. If this hangs on who knows, but so far it is playing out this way.

Also, to your cancelling cable post:
A) only in the US (no one else has much legal access)
B) Hulu is clamping way down and been losing some shows - the studios
are going to kill their one good idea again
C) these are still miniscule fractions of the cable audiences

An example: Dollhouse is a new show from Joss Wheden (Buffy the Vampire Slayer, Firefly, etc. - huge cult following). Didn't even hit 5M viewers on its pilot night, and 5M is the bottom cut-off for anything to even vaguely payout on TV, but was considered a smash hit online with 50,000 viewers. Online is coming, but it's still us silly bleeding edge folks - even for the 12-18 crowd (who can't seem to watch more than 5-10 minutes of anything anyways).

Comments

[jarco]

There was a time when "Hollywood" was big time producer and exporter of quality entertainment. Recent products are just plain awful. Not only have we lost quality on TV but export revenues for movies as well.

The worse part of going to a movie theater is having to sit through numerous previews of yet more and more junk. The previews are so bad, I can't imagine paying to see the whole production.

TV entertainment (verses documentaries, etc.) in general whether over-the-air, cable, or satellite rots. Even the previews preceeding Netflex rented DVD's are awful. Fortunately, most can be fast forwarded or skipped altogether.

2009 Mar 11 02:08 PM

[Lightway]

"Online is coming, but it's still us silly bleeding edge folks - even for the 12-18 crowd (who can't seem to watch more than 5-10 minutes of anything anyways)."

I'd have to agree here. I think it's important for us to take a step back and consider ease of use. Hulu is pretty straightforward, but Boxee can take alot of setup to get going, and entertainment is typically something you want to get going with a minimum of fuss.

Nevertheless, these 2 platforms are going to be transforming the entertainment landscape, and cable companies would be wise to start looking into partnerships to push these on demand services to their customers.

Most cable companies are double as internet providers, so the infrastructure is already in place, the business model just needs to strike some deals and make on demand programming a reality for their customers, before someone else does.

On-demand has long been overdue for cable. True, most cable companies offer digital Tivo type recorders and some on demand movie choices, but the selection pales in comparison to Boxee or Hulu, and the cost is also going to start driving consumers away.

Remember, even though it's only "geeks" who are into the technology now, "geeks" tend to lead the way by 2-5 years with new technology before it becomes wildly adopted by the mainstream population and becomes "cool." I have witnessed this with every new technology over the past 20 years.

2009 Mar 13 04:39 AM

[jstratt]

What I see on one hand is results that so far continue to grow for cable even in a poor economy. The cable industry is an industry people love to hate and writing positive articles on cable has not been fashionable for many years. Still year in and year out they continue to grow top line revenue.

As an example in 2000 cable companies were offering analog video and earning $30 monthly from these base customers. Then came High Speed Internet and Digital cable and the average customer was paying $60 a month. Today telephone has been added and a larger customer base exists of customers paying $110 per month.

The result is that cable companies are efficient at selling programming for content providers. To suggest that content providers are going to give away their product to undercut the huge revenue they get from cable companies seems unreasonable. On top of that their customers typically have to be cable customers first.

2009 Mar 27 05:55 PM