Home/Blog/Trading Ideas/The Beginning of the End for Cable TV

The Beginning of the End for Cable TV

8 August 2012 in Trading Ideas

It’s not a stretch to say that anyone born in 1970, and perhaps a couple years after that, grew up mostly in a life before cable television.

Just 40 years later, are today’s American children already growing up in the post-cable era?

Recent figures for pay-television subscriptions have been quite telling, as a recent story on The Atlantic’s website points out. In this year’s second-quarter, the best estimates are that more than 400,000 US households cut loose their pay-TV subscriptions.

That’s on top of a report that more than 1 million households said goodbye to pay-TV in 2011.

Of course, raw numbers lack proper context, and it’s worth remembering that while 400,000 households were cutting cable and satellite services, an amount slightly larger than that was adding pay-TV, giving the cable industry paltry 0.2% growth in subscribers – but growth nonetheless.

content is king motif

As The Atlantic reports, however, these hold-steady numbers that cable companies are living with also ignores the secular decline that may be taking place relative to the number of US households being formed.

In last year’s third quarter, for example, about 1.8 million new households were formed  — fewer than 17% of them signed up for pay-TV services, according to an Ad Age.

This trend isn’t lost on a consumer base that has seen the explosive growth of smartphones and internet tablets, due largely to an increased preference for online viewing. And, as Ad Age notes, cable “cord-cutting” has still yet to make a huge dent in the businesses of pay-TV operators. Not only do they dominate live TV, new original content and sports, but in most cases, consumers leaving pay-TV are paying the same companies for internet access to watch the same shows they would have seen on television.

Open an Account

Culturally, however, the wonder is whether a younger generation is learning to be OK without the multi-video access provided by pay-TV providers. A Nielsen study in 2011, for example, found that children aged 12 to 17 spend one-third of their time on the internet watching video.

In other words, will the generation now asking “Why pay for music?” become tomorrow’s adults who ask “Why pay for TV?