Why Are People Abandoning Cable TV?

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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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