Bleak Future for Cable Providers as Cord Cutting Surges
It's been no secret that cord cutting is becoming more popular, but the predicted 5.4 million Americans expected to break up with their cable company is far above analysts forecast. It's not quite double the 3.5 million subscribers lost in 2017, but the growth is troubling for the stubborn traditional pay television companies across America. And although some companies are seemingly getting the message (Dish's Sling TV, AT&T DirectTV Now) there still is a rather large disconnect between what the consumer wants and what telecom companies think they should be paying for.
The major player in this ecosystem, Comcast, is braced for one of their worst year's yet according to Macquarie Capital’s Amy Yong. The telecom giant could lose upwards of 430,000 video subscribers by the end of the year, doubling the 186,000 net loss in 2017. On the flipside, Comcast was still able to attract 103,000 subscribers to their X1 service, a market-leading experience that tied together home control as well as streaming capabilities from Netflix, Hulu, etc.
Although many analysts still see a positive long-term outlook for Comcast and their other offerings, the numbers suggest that there is still a disconnect between the services offered and what people are willing to pay for.
“Competition from vMVPDs continues, accelerated by increased marketing spend; integration of third-party apps like Netflix/YouTube into the X1 platform should help,” Yong wrote in a research note.
vMVPD - or Virtual Multichannel Video Programming Distributor for short - is the Sling, DirecTV Now, PlayStation Vue, and YouTube Live of the market that is quickly gaining traction thanks to their smartly priced contracts. Dish has pushed their subscribers on Sling TV to 2.21 million in 2017, which is a relatively speaking incredible feat for a service that just entered its second year of service. That being said, research is showing that companies are barely breaking even because of aggressive pricing and high content fees.
"The main factor fueling growth of on-demand streaming platforms is their original content,” eMarketer principal analyst Paul Verna said. “Consumers increasingly choose services on the strength of the programming they offer, and the platforms are stepping up with billions in spending on premium shows. Another factor driving the acceleration of cord-cutting is the availability of compelling and affordable live TV packages that are delivered via the internet without the need for installation fees or hardware."
As the outlook for traditional TV companies dwindles, there really is no surprise. Balanced between a generation of people looking to save money and pick à la carte for their entertainment, there is no possible way for traditional services to keep up. And if vMVPD's continue at aggressive, breakeven pricing there really is no end in sight for the decline in customers.
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