Pre-Game
I am a sports guy. I love watching pretty much any sport out there. If I dont know either of the teams I always root for the underdog.
There is just something about an underdog story that is appealing, that draws you in, that makes you want to root for them.
In almost every case they lose… but then there’s those rare moments that they upset the favorite.
Wait Eric… What does this have to do with CABLE?!?
I will tell you.
First Quarter
The cable industry has been the favorite for YEARS! Literally for years they have acted as a monopoly with little to no competition.
Yes, people could have gotten satellite but who wants that?!? A small bird or cloud blocking your signal and BAM no more Paw Patrol…
The lack of competition allowed the cable industries prices to balloon and innovation to stifled. Why change when you have customers are locked into your service?
Then comes Netflix… the underdog…
Second Quarter
In 1997 Netflix started as a DVD by mail service. Over the next 10 years they focused on competing with big DVD rental stores such as Blockbuster. One of their biggest selling points was “No Late Fees Ever!” Blockbuster was NOTORIOUS at charging INSANE fees.
In 2008 Netflix begins its streaming service. Over the next 5 years they revolutionize the industry by shifting from physical to streaming services.
What the cable industry didnt realize during this time was they paved the road for Netflix. I am not just talking about the insanely high prices for channels that no one watched but physically.
While the cable industry was more or less a monopoly, internet providers were not. The race for the fastest speeds was on! Netflix would not have been capable of being a viable solution without this critical infrastructure. Cable and internet providers literally paved a road right into the customers living room for Netflix.
Even at the start of the streaming revolution most cable companies just laughed at the idea of cord cutting.
Read this article from 2011: http://business.time.com/2011/06/16/big-cable-isnt-scared-of-netflix-or-that-people-are-too-poor-to-pay-monthly-bills/
They had this illusional that people would always pick them because they always had. However with the Great Recession and Millennials taking over, people looked at TONS of ways of saving money
Services such as lawn care and cable were slashed in order to find money in the budget to pay bills. Millennials were exiting college with a TON of debt and used to living without cable. Most college students shared streaming services with their roommates to lower the cost of college.
This was a perfect storm that the cable companies either didnt see coming or ignored all signs. Either way they didnt react and dismissed Netflix or Hulu, you name it.
In 2010 it was estimated that 88% of households had paid cable. For the last ten years that percent had decreased to 79%.
Fast forward to 2018.
I can make a case that the cable industry is still the favorite. They have 79% of households! That’s a ridiculous amount of customers. However, the trends appear to be obvious that cable as we knew it is dying…
This last chart should be sending alarm bells off… Millennials and every generation AFTER prefer streaming over cable. They even have a new word “Never Corders”. These are people who NEVER had cable…
Which brings me to….
Third Quarter – Cable attempts a comeback!
Like I mentioned before I LOVE an underdog story…
I honestly believe that cable is the underdog here. They are basically in a war with themselves over what they used to be versus what they must be in order to survive. They have contracts with major organizations that need to be evaluated in order to be more flexible to the customer.
There are signs that they are trying…
I recently received a mailing offer from my cable company and internet provider Spectrum.
Spectrum is now offering STREAMING cable…
What took you all so long?!?
I will admit the offer on the surface made me pause and think about it. Honestly it did. For 22 bucks I would get all my local channels plus 10 OTHER channels of my choice. My son is 4 and thinks Paw Patrol only exists at Grandmas house… So he would be stoked!
But what are they really offering??
Local channels…
Wait cant I use my attena to get these for FREE?!?
10 OTHER channels…
Okay… I’ll admit. I cant get these for FREE…
BUT
I have lived without these channels for 6 years now. Do I need these?!?
Probably not.
Then there is the fine print…
This service ONLY works at home!
Wait?!? What?!?
Are you serious???
Netflix, Hulu, you name it streams from ANYWHERE I have a connection. And now you are telling me I have to stream to my house?!? Did someone on the 100th floor of Cable LLC miss the memo…
People want their services to go WITH them…
Add this to the other competition:
- DirectTV Now: More Channels, Stream on the Go, 35 bucks a month
- YoutubeTV: More Channels, Stream on the Go, 40 bucks a month
- SlingTV
- Hulu Live
- And the list goes on.
If Spectrum would of launched this service back 10 years ago, it would of probably CRUSHED the competition. But a lot has happened in 10 years.
Fourth Quarter
So here we are…
Cable is against the ropes, bottom of the ninth, fourth quarter, you name it…
And I am rooting for Cable…
Why?!?
Not because I hate Netflix but because I love competition. Competition in the business world is GOOD for the consumer. If Netflix had 0 competition what prevents them from being the NEXT cable company.
So I am rooting for Cable to force innovation and competition and then MAYBE just MAYBE I will subscribe…
I think the biggest competition between cable and streaming services like Netflix are price, for our household at least. I wholly believe that cable can lower their prices very easily if they wanted to in order to be more competitive. I think our cable/internet bill was something like $190 last month? Netflix costs $11.95. $11.95! I realize that doesn’t include internet, but come on. Cable can do better than $190! Does lowering their bills count as an innovation?
Price is a HUGEEEEEEE deal! At some point cable needs to slash that. But I wonder if price alone can get cable back in the game. Sometimes I think that cable is the next home phone. People chuckled at the thought of no home phone but now its rare. As devices become cheaper and streaming to our portables become easier, why do we need cable?
I’m really surprised to see that data. I though cable was going the way of the dodo bird.
Our household cut cable years ago, and no-one in our family has it anymore except my
brother who watches a lot of sports. Seems like the cable companies should be able to find
a solution because they’re running the fiber, and if they get their way with Net Neutrality look
out Netflix!
Haha. It’s going away… I think the graphs showing who likes streaming services is a clear indication. The thing that the cable industry needs to do is change their business model to adapt. I am just not sure how many are willing to.