Why Are People Abandoning Cable TV?

Is the internet finally following through on its threat to kill television? New reports are showing that viewers are dropping their cable subscriptions and, more interestingly, not replacing them with another cable or phone subscription. Numbers for the third quarter of 2010 show that Time Warner Cable lost 155,000 subscribers, more than double the same period last year, while Comcast’s drop-off rate also more than doubled, to 275,000 (This news follows last quarter’s similar drop, the first ever).

Cable companies believe that the departing customers are either switching to satellite or abandoning television altogether, but a much more realistic possibility than the latter is that they’re simply choosing to watch shows online; according to Ian Olgeirson, a senior analyst at SNL Kagan, “It is becoming increasingly difficult to dismiss the impact of over-the-top substitution on video subscriber performance, particularly after seeing declines during the period of the year that tends to produce the largest subscriber gains due to seasonal shifts back to television viewing and subscription packages.” (More on Techland: Hulu Plus Drops to $8 Per Month)

This has prompted moves to make television packages cheaper, with TWC announcing a budget package called TV Essentials to be launched in New York next week. But even that package – launching around $30, with an aim to raise it closer to $50 by next year – is more expensive than Hulu Plus, which has just announced a price cut to $7.99 per month. With prices that low, can cable companies really compete?

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richardsrussell

Or it could be that, in the current economy, unless you own a bank or an insurance company and have your annual $10,000,000 bonus to fritter away on inessentials, you’re looking to cut out luxuries.
http://gman5541.wordpress.com gman5541

I agree with richard. It’s silly to be wasting your money on cable when your don’t have the money. If you possess a broadband internet connection then having a NetFlix or/and a Hulu account seems cheaper than CableTV services these days.
http://crichton007.wordpress.com crichton007

Well, cable has always charged a luxury price (with a few exceptions) and Satellite is cheap by comparison but the satellite provider’s prices are going up too so they should heed the story of the cable providers. With prices on the rise I also think that people are starting to take the same view of video entertainment as they do of audio: they don’t mind ripping off those who are trying to rip them off.
fandroid2

I think another thing that you are missing is that with digital TV you can now get HDTV for free over the air. People who live near any decent size city can get a lot of what they want to watch in Hi-def just by adding an antennae. If you were to somehow add a DVR to that, then suddenly the added few channels in lo-def that a cable or satellite provider supplies seems to be a waste of money. Especially at $50.00/month and up.
mrreeee

Yes, the bum economy was a factor for my cutting cable. $100 per month for hundreds of channels I never watched seemed a good belt-tightening move. I was never a big TV person anyway. I also cut land line phone service just over 7 years ago.

My first desire was to subscribe to HD channels ONLY, since I rarely watched standard-def. Time Warner said no to that, so I cut the cable. I only miss some live sports and little else.

Cable providers need to switch to an ala carte subscription mode, where subscribers can decide which channels they want, vs. a boatload of garbage. Internet access and Netflix allows people to decide EXACTLY what they do and do NOT want to see. Cable needs to acknowledge that fact or face ever dwindling subscriber numbers.
briscoshorse

I know about 25 people so far that have cut the overpriced, crappy service providing, monopolistic cable.
I helped all of them by telling them the following:
Dell zino = 400ish
Remote control = 30.00
Install hulu desktop, install hulu integration
It comes with netflix built in!
If you figure you spend around 100.00 bucks a month for cable anyway, in 4 months this new cable box(zino) is paid for, then you can move on to the next room.
You can also store all your movies (Mymovies = Free)and play them in any room that has a pc.
adamskinner

What we’re seeing is a paradigm shift. People don’t want “spoon-fed” content. They want content on demand.

This started with VCRs. People would record their favorite programs from cable or OTA, and watch them at their leisure. With the advent of DVR services like Tivo, this became so streamlined and versatile that people used this method as their primary means of watching syndicated content. These devices made it very easy to skip commercials and watch the shows you want on your own time, not some arbitrary “prime time”.

At the same time as DVR devices were being utilized by the masses, the geek vanguard were using torrents. This amounted to a kind of crowd-sourced DVR, where a person or group would record the show and share it online with others. By using RSS plugins, people were (and are) able to listen for new episodes and automagically download them. This requires storage space, tech savvy, and an appropriate attached display, however.

When torrents began to be enough of a threat to the networks, somebody got the bright idea to let the geeks take control. Thus, Hulu was born. Streaming recent content the next day, peppered with minor levels of commercial advertisement (2 or 3 minutes compared to 18 minutes for a 43 minute TV show), Hulu took off like a rocket. At the same time, Netflix began establishing partnerships with places like Starz and expanding their Watch Instantly catalog. Today, Netflix released a blog post that said:

The fact is that Netflix members are already watching more TV episodes and movies streamed instantly over the Internet than on DVDs, and we expect that trend to continue.

In terms of hours served, Netflix delivers more content via their Watch Instantly service than their (previously) core DVD service. Not too long ago, their CEO stated that they “used to be a DVD by email service that dabbled in online streaming, but within 2 years will be an online streaming service that also does DVDs”. You can have unlimited access to their streaming catalog for $9/mo.

So people are starting to drop cable like the bad habit it is. There are two things that keep the cable TV service in business: inertia, and live sports programming. Live sports is a weakness today in online offerings. People keep cable just for it, even though it’s costing them $80/mo (or nearly $1000/yr). For that kind of money, you can buy a new computer and HDTV every 2 years. When you think about it, an additional $1000/yr in discretionary income is a pretty huge deal for most people. Hooking up a $300 silent HTPC to your HDTV and connecting to the wireless internet you already pay for is starting to look better and better, eh?

So today, the DVR paradigm has migrated online. You can now watch what you want, when you want it, and have nearly everything you want at your fingertips, instantly, just by hitting up a streaming video website like Hulu. No exorbitant monthly fees; no equipment rental costs; no managing of DVR space. Instant, discoverable content at your fingertips. The spin-up cost is low, and the rewards are great.

This is why people are abandoning cable TV.
richardsrussell

Adam Skinner should be writing for Techland.