TV cord cutters upending industry
Published January 28, 2016
Editorial by Jacksonville Daily News, January 28, 2016.
A bunch of the most talked-about television programs aren’t on traditional TV networks or cable channels, they’re on Internet streaming services. “Orange is the New Black” and “Making a Murderer” are on Netflix. “Transparent” and “Mozart in the Jungle” are on Amazon. Hulu has original programs but also has a vast library of great shows from other networks, ranging from “It’s Always Sunny in Philadelphia” to “Seinfeld” repeats.
In other words, this is a golden age for television viewing in which you don’t need a couch — or a television. You can watch anytime, anywhere on your laptop, smartphone or tablet.
The phrase of the decade to describe the economic and cultural shifts brought on by digital technology is “disruption.” It’s a marvel to contemplate: how Uber upended the taxi industry; websites challenged the news business; wine apps disrupted sommeliers (it’s true, your smartphone is ready to recommend a nice shiraz). Now it’s television’s turn.
The TV revolution isn’t a sudden phenomenon. It’s been 30 years since there were just three national TV networks, and as channels proliferate the quality of shows keeps improving. But we’re on the cusp of a huge change, in which viewers realize they don’t need to pay a big monthly bill for cable’s hundreds of channels: They can cut the cord and piece together their own Internet-based collections of subscription programming.
Last year, 17.1 percent of U.S. households didn’t pay for traditional TV — they either cut the cord or never had one. That number will jump to 22.6 percent of households by 2019, according to a forecast by eMarketer. The trend is especially pronounced among tech-savvy millennials. A Pew Research Center survey says 19 percent of 18- to 29-year-olds are cord cutters (they dropped cable or satellite TV subscriptions), while another 16 percent have never had a traditional pay TV package.
The first big acknowledgment of the change came last summer when Walt Disney Co. warned that its cable channels, including ESPN, were losing subscribers. Media stocks tanked, wiping out nearly $50 billion in market value in two days. Not everyone suffered. Netflix, worth $44 billion, was the best-performing S&P 500 stock in 2015. The company is growing globally and giving fits to Hollywood competitors, who shake their heads because they know they gave the company its start. (Netflix’s original business was movie rentals.)
It’s an especially topsy-turvy situation because Hollywood is on both sides of this equation. Yes, the TV and cable industries are freaked out by cord-cutting viewers, but the bigger Netflix and other services get, the more money they have to spend on programming — which they acquire from Hollywood studios.
Cable still has a strong hold, especially on viewers who want to watch live events like sports and news, and cable channels like the fees they receive from cable providers. But the fragmentation has begun: For example, you can subscribe to HBO via the Internet without having cable service. Other experiments in a la carte pricing, or unbundling, are underway.The entertainment and cable industries are in a bind. They need to rethink their business models to give consumers even more choices.A version of this editorial first appeared in the Chicago Tribune.http://www.jdnews.com/opinion/20160128/tv-cord-cutters-upending-industry/?Start=1
January 28, 2016 at 5:09 pm
Norm Kelly says:
I think it's been about 3 years since I cut the cord. Helped my son cut his cord this month. Working on my sister cutting hers. All of us have converted to steaming.
The cable companies are killing themselves by coming up with such goofy 'package' requirements. About the only people that are committed cable-people are those who subscribe to the sports package(s). First, the cable companies force you to pay for the most expensive package, then they hit you for the sports package fee. Can't have one without the other! Then they play games with their fees. Every anniversary, they raise your rate. But if you take the time, several hours, to argue with them on the phone, most of the time they are willing to cut your bill. But why go through the hassle!? Want to change your plan to save some money? Don't work your way out of 'the package' or reducing your services will actually INCREASE your bill. How foolish is that! (btw: i wouldn't waste my time to watch a sport, so not having the sports package has caused me not the slightest angst! besides, if i ever wanted to waste my time, there's plenty of sports on local channels, all of which i get.)
When it comes to streaming, everybody is getting into it. Even the broadcast company that has fought against streaming services the hardest, CBS, is now selling a streaming service. You know the end is in sight for cable companies if even CBS is streaming their shows!
I pay for Netflix, Hulu, and have recently started checking out Amazon. So far, Amazon seems the most likely to get dropped; they don't have as much of what I want to watch. But for the price, streaming can't be beat.
Now, the same thing will kill streaming that is killing cable. If they start getting crazy with their pricing, they too will start to drop subscribers. Being able to watch what I want, when I want, without having to remember to do anything, is nice, but if the cost gets crazy, that too will change. Now that I have an antenna on my roof, getting all the local channels in hi-def, I'll drop any streaming service that gets out of line also. How many people stop to think about how much a $300 (or more!) cable bill is actually costing them to watch television? How many people actually take advantage of that much tv to make it worth this much money EVERY MONTH!? When my combined cable & internet bill reached over $155 per month, I cut! Ain't looking back. Encourage everyone I know to do the same. Only ones not taking a look at it are those who subscribe to the sports 'package'. Wouldn't it be nice if the cable companies found a way to save themselves and allowed a-la-carte buying?
Anyone who hasn't checked out streaming yet, is definitely missing something.
