Cable Loses Nearly Three Million Subscribers to Streaming

The rise of streaming television is something I've been covering rather obsessively on my Daily Call Sheet for going on a year now. Not because I have any kind of inside information or data, but because if you connect the dots of the hundreds of various news stories that have been written about the phenomenon, you can see that something seismic is happening.

Bundled cable is evil, and through this evil we are forced to not only pay for dozens and sometimes hundreds of channels we never watch, but we're also forced to pay for and subsidize channels that offend our values: Sundance, MSNBC, PBS, Current TV, OWN... This is un-American. It's welfare and affirmative action combined. A number of these channels would collapse without the evil of bundled cable fees, because you can't pay Rachel Maddow's salary on Sham-wow commercials alone. Worse still, these cable packages are absurdly expensive -- especially for those of us old enough to remember when the cost of television was the price of a pair of rabbit ears. 

So along comes Netflix and Hulu with the idea of providing -- for less than $10 a month -- a streaming service that allows you to watch what you want to watch when you want to watch it. Better still, there are no commercials. And anyone who has recently watched "Celebrity Apprentice" or anything on the Discovery Channel knows that the length and frequency of commercial interruptions have gotten obscenely out of hand.

Knowing all of this and watching Hollywood regularly freak out over Netflix (especially their streaming service) told me something was happening and now we learn what that something is:

Netflix and Hulu are convincing millions of cable, satellite and telco subscribers to cut the cord and dive into video streaming.

That's the conclusion of a new report released this week by the Convergence Consulting Group, which finds that 2.65 million Americans canceled TV subscriptions between 2008-2011 in favor of lower-cost internet subscription services or video platforms.

In just three years, 2.65 million Americans canceled cable to go with streaming.

If this continues or grows, the ramifications will be enormous. First off, the revenue Hollywood is losing and will lose will affect every cable channel out there, especially the low-rated ones being propped up by cable fees. But this also means fewer people are watching commercials, which means less money from advertisers.

You also have a situation in which people are no longer willing to engage in appointment television. The DVR was really the end of this tradition, but streaming is a step away from the very idea of channels and networks. Streaming is only about content. As of now, Netflix has hundreds of television shows licensed from all over the English-speaking world that probably came from dozens of different outlets. Those of us getting used to surfing Netflix are no longer thinking in terms of brand loyalty to a network or even a country, which, just for starters, cripples a network's ability to build an audience for new shows around a legitimate hit--something NBC did brilliantly on Thursday nights for a couple of decades.

Could we be moving into a situation in which networks and cable television come to an end and we all pay $7.99 a month to stream whatever we want commercial-free?

Though I think the rest of the article linked above misses some crucial points, it is correct in pointing out that things won't be that simple: 

The good news for the folks at Comcast, Time Warner Cable and their ilk is that while Convergence estimates that 1 million subscribers abandoned cable, internet or telco for streaming last year, it projects that cord cutters will begin to put away the scissors in 2012.

Convergence co-founder Brahm Eiley projects that the number of people opting out of TV subscription services will begin to slow in 2012 and 2013.

Part of the problem may be the dicey long-term prospects for Netflix, which has successfully lured away many cable users with its cheap subscription packages and extensive streaming library of older movies and shows.

The subtext here is that the battle is on. Hollywood understands that streaming is a major threat to their bundled cable/commercial sponsor cash cow and will now raise the price of licensing their product for streaming. The article seems to think that an increase in licensing cost will restrict the amount of content Hulu and Netflix will provide, and for that reason people will stick with cable in order to get programs they can't get elsewhere. 

I wouldn't be too sure about that.

Because of a contract, I'm currently stuck in a satellite package until the end of the year. I don't even get AMC or TCM, and I'm paying $60 a month. So other than cable news, I don't even watch the damn thing. But...

As a fan of AMC's "Breaking Bad," "Mad Men," "Walking Dead," and "The Killing" -- I'm still not willing to pay the extra money to bump my package up to get those shows because, frankly, I'm willing to wait a year for them to show up on streaming or wait a few months to rent them on DVD.

Not only is it cheaper to watch these shows this way, but I get to gorge on them all at once and I don't have to suffer through all those commercials.

This is how I think millions of people are starting to look at things, especially when they look at the obnoxious price of their cable package.

The article, however, is correct in its assumption that Netflix and other streaming services will have limited content, but as Americans look at what streaming does have to offer for less than $10 compared to their $70 bundle cable bill (and the obscene amount of commercials that go with it), I think more and more will be willing to sacrifice selection for a cheaper, more convenient service and I think more and more will be willing to wait six months or a year to see the latest season of "Breaking Bad."

And as millions of customers can only be found on streaming, Hollywood will have to go to the customers.

No, I think this revolution has only begun. 

Down with bundled cable. Power to the people!


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