Cord-cutting reaches epic levels (goodbye cable, hello streaming)
The cable industry obviously took a long time to die. Unlike the record industry or print newspapers, which seem to be falling off a cliff, people have slowly been dropping their cable TV subscriptions.
Known as cord-cutting, it’s a process where people ditch a traditional pay-TV subscription for a variety of streaming services. It’s a phenomenon that’s been happening for years, but it’s accelerating and the numbers are actually worse than they look for Comcast. (CMCSA) – Get the Class A report from Comcast Corporation,, Charter (CHTR) – Get the Class A report from Charter Communications, Inc.AT&T (J) – Get the AT&T Inc. report.and the rest of the struggling industry.
It’s worth noting that Comcast, Charter, and other traditional cable players have typically added as many, if not more, Internet customers to make up for their cable losses. That’s because while Netflix (NFLX) – Get the report from Netflix, Inc.waltz disney (SAY) – Get The Walt Disney Company Report Disney+ and other top streaming services can be purchased by anyone, anywhere, while the internet still holds a monopoly in significant parts of the United States.
“At least 49.7 million Americans only have access to broadband from one of the seven largest cable and telephone companies. In total, at least 83.3 million Americans cannot access broadband throughput only through a single provider,” according to the Institute for Local Self Reliance.
Cable loses more subscribers
At first glance, it looks like cable lost slightly fewer customers in 2021 than in 2020, according to data from the Leichtman Research Group (LRG). The data company found that “the largest pay-TV providers in the United States – representing approximately 93% of the market – lost approximately 4,690,000 net video subscribers in 2021, compared to a pro forma net loss of approximately 4,870 000 in 2020.”
The main pay-TV companies now have 76.1 million subscribers. It’s a number that’s actually worse than it looks, as 7.9 million of those customers subscribe to lower-cost streaming cable plans through products like Disney’s Hulu Live, Sling TV and Fubo’s. (FUBO) – Get the report from fuboTV Inc. Fubo TV.
Cable numbers began to decline in 2014 when the industry lost just over 100,000 customers. The numbers accelerated steadily to top 1 million in 2017, before doubling in 2018, then again in 2019, before settling at the current rate of around 4.6-4.9 million subscribers per year.
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On a percentage of the set, cable losses have increased and this should not change any time soon.
What is the impact of the cable cut disaster?
The cord-cut isn’t just impacting Comcast, Charter, AT&T and other major cable companies. This also has a ripple effect on the entire cable television industry. Essentially, the traditional wire harness serves as a kind of TV socialism. You pay for the channels you watch and the ones you don’t.
Content companies/channel owners are getting anywhere from pennies to around $9 per subscriber for Disney’s ESPN family of channels. When people cut the cord, those channel owners get less money, resulting in things like ESPN laying off hundreds of people, including some top on-air talent, and channel closures like ESPN Classic and NBC Sports. Comcast Network.
As cable shrinks, niche channels become less viable. Some will support themselves through streaming services, while others will cut their budgets or shut down altogether.
This creates a cycle in which your cable subscription becomes even less valuable, causing more people to cut the cord. It’s a cable death cycle, though like printed newspapers and physical discs and CDs, the total probably won’t reach zero (at least for a few years).
Comcast and Charter have generally covered their cable losses with broadband additions. AT&T already took a nearly $15 million write-off charge when it spun off its DirecTV business. AT&T paid $67 billion for DirectTV (a figure that includes debt) when it bought the company in 2015.