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Monday, November 18, 2019

Could Cord-Cutting Doom Cable?


Cable cord-cutting is unlikely to abate any time soon, because consumers today can drop cable and replace it with an array of streaming services for less money. It's possible to get nearly every channel via streaming, so consumers can theoretically save money and still get what they want.

How bad is it?

USAToday reports the major pay-television providers lost a total of 2.87 million net customers in 2018, up from 1.49 million the previous year, according to data from Leichtman Research Group (LRG). Those numbers got even worse in the first half of 2019, when the industry dropped another 2.88 million subscribers. And matters got still bleaker in the third quarter: According to the report LRG released Wednesday, the pay-TV companies lost another 1.74 million customers in Q3, the biggest single-quarter loss the industry has ever posted.

Arguably, those declines are even worse than the headline numbers would suggest because LRG counts 3.83 million streaming cable customers as part of the total. But those are subscribers who opted for cheaper plans, so they are probably significantly less profitable to the cable companies serving them.

This accelerating pace of people dropping cable coincides with a  slowdown in the growth of broadband subscriptions – signing up new internet customers no longer compensates for the earnings lost from cord-cutting pay-TV customers. After adding 2.4 million broadband users in 2018, the industry has added about 1.9 million so far in 2019. That's still strong, but it's well below the approximately 4.5 million net decline in cable customers.

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