Paid subscriptions for TV service, primarily through cable networks, are declining this year for the first time ever. The causes are several and intertwined: rising costs associated with the increased bundling of channels people dont want but are required to buy combined with declining household incomes; the rising use, especially among families with children, of tablet computers for watching cartoons, movies, games etc; the demand for more interactive and personalized fare among consumers, young and old.
This change mirrors broader changes in society and the economy. The outbound one-way communication from the source of power to a public presumed grateful for whatever crumbs made available to it is dead. Now, everyone has an opinion - an attitude - and a camera-ready soundbite for every occasion.
Cable systems' monopolies artificially extended the existence of the medium beyond what might have otherwise been the natural limits of its useful life. But that structure is beginning to crumble as the financial weight of the alternatives puts an accumulation of stresses on the forces that have held it in place until now.
The question is what will supplant it. Regulatory strictures designed in an earlier and less complicated age will probably decline in the face of newer, more popular developments. The cable guys have never been popular, having an earned the reputation of gougers and advantage takers from the start. Their determination to wring financial concessions from customers who grew up with 'free' TV was never enviable, but their profits were.
Now they are being hoisted on their own petard: greater variety, but in this case, for a lower rather than a higher price. Just like the economists say it is supposed to work. We love it when theory follows practice. JL
Jeff Roberts reports in PaidContent:
For the first time ever, the number of U.S. households paying for TV service will go down. The news comes as a tipping point in consumers’ struggles to break away from a TV industry that forces them to buy bundles of channels. It’s finally happening. The number of Americans who pay for cable-like TV products is declining, says a research forecast that claims subscriptions peaked at nearly 101 million in 2011 but will decline to less than 95 million by 2017.
The stats come by way of research group TDG.
While a five percent decline is hardly earth-shaking, TDG describes the end of cable TV’s growth as a tipping point with ”long-term tectonic implications.”
This makes sense. The price of cable bundles is climbing ever higher, at the same time as a bevy of new distribution options is increasing consumer frustration at having to purchase channels they don’t want. Meanwhile, a rising generation of “cord-nevers” thinks buying a cable package to watch one show makes as much sense as buying a CD to hear a single song.
But don’t count out the TV industrial complex just yet. The industry still has the best content goodies, including sports and HBO fare, and will continue forcing consumers to buy bundles to access them. It will also keep dangling cable passwords as a requirement for people to watch content on mobile devices.
Meanwhile, the brave new world of cord-cutting is still not ready for primetime. As my colleague Stacey Higginbotham explained, the online video world still has too many parts and too little accountability – meaning consumers will be stuck with unreliable service for some time to come. The first cable decline is a tipping point, not a revolution.
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