According to Fortune Magazine, more than one in five U.S. households had completely ditched traditional cable TV packages by mid-2016, and this number is only expected to rise in the future. These zero TV households have been termed “cord cutters” because they have abandoned traditional forms of cable TV due to the cost, a lack of interest and more favorable options in the market. The most significant factors that have contributed to the slow death of cable TV include the rise of the internet, the rise of mobile devices, various new streaming services and cable TV’s strong denial of the rising competition.
The Rise of the Internet
The internet has truly become a platform for free speech and has given rise to a new era of entertainment. In 2005, YouTube was launched as a way for individuals to watch and share original video content. YouTube revealed in their February 2017 press conference that people around the globe watched over one billion hours of content every day on the amazing platform. The internet has also allowed for more social connection through websites like Facebook and Twitter. These different forms of online entertainment have become a more preferred way to spend idle time, connect with others and stay up to date on current events than traditional television programming.
There are currently over 966 million websites in the world, and over 40 percent of the world population are internet users. The dramatic increase in the availability and popularity of the internet is likely the biggest contributor to the decline of cable TV.
The Rise of Mobile Devices
As the number of U.S. households continues to grow, the amount of households that own a television set is declining. People are spending much more of their off-time on mobile devices than they are spending watching TV. Astonishingly, by 2017 mobile devices will account for over 68 percent of all internet traffic around the globe. With all of the added benefits that a mobile device provides, many individuals are opting to lose the television set in favor of internet-based mobile entertainment.
Video-on-demand programs allow customers to download or stream television shows or movies from an online source. A recent study conducted by the global company Nielsen found that about 65 percent of participants use some form of video-on-demand programming. Services such as Netflix, Amazon Prime, Apple TV, Hulu Plus, HBO Go, and Disney allow you to watch various television shows and movies by paying a monthly fee. Just recently, YouTube announced that it will also be launching its own on-demand TV service with access to over 40 networks . These programs can be streamed over mobile devices, tablets, computers and new smart TVs.
The benefits of streaming services include flexibility, customized programs and affordability. Having entire seasons on demand is much more appealing to some customers than the typical cable TV scheduled programming. Many platforms, such as Kafka on AWS, are available that make streaming data quick and efficient. These streaming services are proving to be some serious competition for traditional cable TV providers.
Extensive research conducted by Macquarie Capital revealed that in 2013 people spent more time on digital media, but more advertising money was being spent on television ads. Macquarie predicted the upcoming rise in advertising dollars shifting from TV to mobile-friendly digital media types.
Cable Television relies on both advertising dollars and subscription fees to maintain their programming. With both these sources of revenue sharply decreasing, the cable industry is really struggling to maintain any kind of footing in their industry. Unfortunately, major cable television companies did not take initial competition as seriously as they should have and they are now in crisis mode. The early-on denial cost cable TV providers the opportunity to incorporate new technologies like the internet, mobile devices and streaming services into their services and are now in direct competition with them.
The number of cord cutters is expected to increase even further in 2017. The rise of the internet, mobile devices and streaming services combined with the early-on denial of cable TV providers has created the perfect storm for the slow and inevitable death of cable TV.
By: Kevin Faber