People have been predicting the death of cable TV
for a long time, but this really might be it.
As recently as a decade ago, nearly all
Americans — more
than 85 percent of US households — paid for packages of TV channels from cable
or satellite companies. That started to decline haltingly at first and then far
more quickly in the past few years.
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Now, the share of American homes that pay for conventional
TV service is closing in on 50 percent, according to recent assessments from
investment analyst
Craig Moffett and
S&P Global Market Intelligence’s Kaganre search group.
For comparison, cellphones were around for decades before
the percentage of Americans who didn’t have a landline telephone at home
reached 50 percent, around 2017. (In the most recent government figures, about
one-third of American adults have a landline.)
Maybe it seems inevitable and predictable that cable TV
would go the way of the landline. I promise you that it was not necessarily
obvious, even once Netflix started to take off. Old habits die hard. Old
industries that make a lot of people rich die even harder.
And don’t forget that some new technology habits catch on
fast but don’t stick. Remember Myspace? Or predictions that electric scooters
or Segways would become go-to forms of transportation for urbanites?
What may be a terminal decline of America’s cable TV
industrial complex is a big deal. It shows that technology can change
entrenched ways of doing things slowly, and then suddenly, with profound ripple
effects.
Ian Olgeirson, a research director at Kagan who has been
following America’s TV market for about 20 years, told me that he was caught
off guard by how quickly the monthly cable bill went from being standard to obsolete
for many Americans. (Protocol had more on this in a recent newsletter.)
Olgeirson and other TV experts I have been speaking to did
not single out one tipping point in cable TV’s big shrink. They said the
downward trend was more like a series of creeping changes that piled up.
Netflix offered us sofa sitters a happy alternative to
paying for 500 TV channels that we mostly didn’t watch. In the TV industry,
there was also a slow realization that clinging to the old ways might be fatal.
Cable TV companies stopped fighting so hard to keep people from defecting and
were happy to instead sell you zippy internet service for streaming binges.
Once the cable TV edifice started to crumble, entertainment
companies like Disney decided that they couldn’t go all out to prop up the
system that had sustained them for decades. They would prefer to become their
own Netflix.
Old TV still has some life left. For now, Americans spend a
majority of their TV time watching conventional television rather than
streaming video. Streaming is also a tough business. And including the
quasi-cable-TV services from online companies like YouTube and Hulu, about
two-thirds of US households pay for some old-school TV channels. An optimist
would say that it’s stunning that cable TV has stayed this resilient.
But it is clear that the cable TV system that for decades
brought joy and headaches to tens of millions of Americans is petering out. The
wild card, as Moffett, the investment analyst, wrote in a private report to his
clients this week, is whether Americans keep turning away from cable and
satellite TV relatively slowly, or whether it will “abruptly collapse, like a
Jenga tower.”
And the ripple effects may only have just started. For
example, major sports leagues like the National Football League have thrived on
the money in the cable TV system. If the cable model topples, it could torpedo
sports as we know them.
I have always loved TV. I felt like a real grown-up when I
first started to pay a mammoth TV bill, partly to watch my favorite football
team. I had scaled back my cable TV package, but then a few months ago I was
notified that my bill was going to increase by about $10 a month. That was it.
I’m a no-cable household now, too.
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