In recent years, there have been numerous predictions forecasting the end of cable television and cable companies. The reasons for this harsh prediction may be obvious especially with the advent of streaming services and the mounting costs of cable television packages.[1] Though cable companies are continuing to struggle, they are expanding their range of services in the hopes of being competitive and profitable.[2] This post will discuss the new strategies used by major cable companies such as AT&T, Comcast, and Charter Communications. These companies own some well-known subsidiaries, including Sling TV, DirecTV,[3] Xfinity,[4] and Spectrum.[5]
The increase of “cord cutters,” is a major reason why cable companies have been struggling in recent years. [6] Cord cutters are former cable customers who have dropped their cable services and instead opt for streaming services or other digital options.[7] The customer base of cable companies has been greatly impacted by these cord cutters. Comcast lost nearly 100,000 video subscribers just in the last quarter.[8] In 2017, Dish Network lost 995,000 video subscribers and Direct TV lost 554,000 subscribers.[9] One of the primary motivations for cord cutters to drop services is the high cost of cable television packages.[10] Since 2000, the average cable and satellite bill has gone from $60 to nearly $100 per month, constituting a 74% increase.[11] Despite this jump in pricing, median wages have remained the same during this time period.[12] Streaming services are offering consumers a cheaper alternative to cable television forcing cable companies to find other ways to keep up.[13]
Despite the loss in TV subscribers, many cable companies are making up for these losses outside of their cable services. During the same period that Comcast lost almost 100,000 subscribers, it gained more than 360,000 broadband customers.[14] At the end of April, shares of Comcast rose 2.7% after it confirmed its $31 billion bid for Sky,[15] a UK-based television company that has been successful in making its own content.[16]
Meanwhile, Charter Communications has begun offering a new low-price cable television streaming package that allows the consumer to add on other networks, such as HBO, with an additional monthly fee.[17] The company has also established a gigabit internet service in Wisconsin, which will provide an “ultrafast connection for homes and businesses.”[18] Charter Communications is hoping to cater to customers with data-intensive needs, such as architects, engineers, and physicians in the area.
AT&T hopes to bring back cord cutters by creating Watch, a new low-cost service that will stream channels in a way “meant to support the cable business model and encourage mobile TV viewing.”[19] This service should be available to any customer, “regardless of who they get wireless or broadband service from,” but the package will be free to customers who have AT&T unlimited wireless service.[20]
Since these services are still relatively new, it is difficult to determine how effective they will be in mitigating the loss of subscribers. It seems that cable companies are finally addressing customer complaints regarding overly expensive cable packages that include hundreds of channels most customers may not even want. It is clear, however, that cable companies must continue to find innovative methods to combat cord cutters.
[1] Daniel B. Kline, Is Cable Dying? Where Cord Cutting Stands Now, The Motley Fool (Apr 9, 2018, 7:45 AM), https://www.fool.com/investing/2018/04/09/is-cable-dying-a-look-at-cord-cutting.aspx.
[2] Anjali, Athanvaley, U.S. Cable Companies’ Wireless Entry Paves Way for ‘Quad’ Play, Reuters, (June 30, 2017, 1:19 PM), https://www.reuters.com/article/us-sprint-m-a-quadplay-analysis-idUSKBN19L2HW.
[3] Kline, supra note 1.
[4] Gerry Smith, Comcast is Now an Internet Company, Not a Cable-TV Provider, Bloomberg (Apr. 25, 2018, 9:43 AM), https://www.bloomberg.com/news/articles/2018-04-25/comcast-s-sky-tv-bid-belies-a-shift-away-from-video-in-the-u-s.
[5] Rick Barrett, Charter Communications Launches Gigabit Internet Service In Southeastern Wisconsin, Milwaukee J. Sentinel, (Updated 3:24 AM Apr. 25, 2018), https://www.jsonline.com/story/money/2018/04/25/charter-communications-launches-gigabit-internet-service-southeastern-wisconsin/549974002/.
[6] Kline, supra note 1.
[7] Id.
[8] Smith, supra note 4.
[9] Jared Newman, Hey Cable Companies Maybe This is Why Cord-Cutting is a Thing, FastCompany (Apr. 26, 2018), https://www.fastcompany.com/40564405/hey-cable-companies-maybe-this-is-why-cord-cutting-is-a-thing.
[10] Id.
[11] Id.
[12] Id.
[13] Kline, supra note 1.
[14]Smith, supra note 4.
[15] Stephen Culp, Wall Street Ekes Out Small Gains as Earnings Offset Cost Worries, Reuters (Apr. 25, 2018, 8:09 AM), https://www.reuters.com/article/us-usa-stocks/financial-tech-stocks-lead-wall-street-lower-as-yields-rise-idUSKBN1HW1KW.
[16] See Brian Fung, What Comcast’s $31 Billion Offer for a U.K. TV Company Tells Us about the Cable Giant’s Ambitions, The Wash. Post (Apr. 25, 2018), https://www.washingtonpost.com/news/the-switch/wp/2018/04/25/what-comcasts-31-billion-offer-for-a-u-k-tv-company-tells-us-about-the-cable-giants-ambitions/?noredirect=on&utm_term=.8b94a23a4fd1.
[17] Jeff Playsky, Spectrum Wants You Back: Cut-Rate Internet TV Package Targets Cord-Cutters, USA Today (Mar. 30, 2018, 12:31 PM), https://www.usatoday.com/story/tech/nation-now/2018/03/30/spectrum-wants-you-back-cut-rate-internet-tv-package-targets-cord-cutters/473233002/.
[18] Barrett, supra note 5.
[19] Brian Stelter and Hadas Gold, From Witness Stand, AT&T Chief Details New $15-a-Month Streaming Service, CNN (April 19, 2018, 9:27 PM), http://money.cnn.com/2018/04/19/media/att-watch-streaming-service/index.html.
[20] Id.
