More People Abandon Cable for the Internet, But There are Tradeoffs
By Steven Pate in News on Aug 11, 2011 8:30PM
More people than ever are cancelling their cable and supplementing their media intake with online offerings. During the second quarter, cable companies lost an estimated 195,700 subscribers, supposedly the first such loss.
Satellite companies are also feeling the pinch: Dish Network lost 135,000 subscribers in the second quarter and froze prices on some of its plans through 2013 to stop the bleeding.
Online streaming leader Netflix, meanwhile is weathering backlash after raising its rates. You don't need a cable package featuring The Weather Channel to know which way the wind blows.
Analysts point to the state of the economy, high unemployment and decreased home sales as factors keeping the number of cable and satellite subscribers down. With the average monthly cable bill averaging $74, people are a lot quicker to notice how easy it is to find the things they want to watch online. Besides major streaming sites like Netflix and Hulu, people looking for the shows they'd normally depend on a cable subscription to supply them with can use sites like clicker.com to find them online, or access any number of bittorrent sites offering legal and illegal downloads, or dig around the gray area of Internet frontier outposts like uStream, justin.tv and TVDuck. New television sets that come standard with advanced hardware options and internet hookups further accelerates these trends.
According to the annual Battle for the American Couch Potato report (PDF) issued in April, the average cable subscriber watches 240 hours of TV per month, which breaks down to $.62 per hour for a single person. We think that sounds like an awfully high number of hours (though we might change our tune during Shark Week). The numbers they provide for Hulu or Netflix (40 hours/month $.20/hour) only seem like a good idea if you can handle the three great caveats of a cable/satellite-free life: sports, live TV and channel surfing.
If you are a sports fan, you already know the cable companies own you. This has to be strongly considered before cutting the cable. For example, 24 of the 82 games on the Bulls schedule are on cable, and they are the most intriguing matchups. Local blackouts mean that NBA.TV is not an option. Illegal streams, watching at a friend's house or heading to the sports bar becomes your only options.
Live television is something the Internet is getting better at, with major events being streamed with more frequency. Nevertheless, watching that episode of True Blood or Game of Thrones is only possible with the big providers. Resign yourself to spoiler avoidance and walking past the water cooler blasting your iPod. While channel surfing among certain limited options is possible in an Internet-based television set-up, the simple activity of flipping through the whole Comcast spectrum is a joy/terror available only to the $74-per-month club.
More people are bound to abandon ship every year, but this is the tip of the proverbial iceberg, with the losses representing only .2 percent of their 83.2 million video subscribers. The die is cast and cable companies may be giving up on the prospect of adding new customers in a scramble to hold on to whatever revenue streams they think they still have. As in the music industry, the high-bandwith Internet age has shifted the ground beneath their feet.