The Uncertain Future of Cable TV.


Shani Hilton (my housemate, I should note) picks up on a report showing a steady decrease in the number of "cord-cutters" -- or people who don't pay for cable -- and argues that we're seeing the "slow death of cable":

Many cable providers have been raising prices, and right now, they can afford to do so because most subscribers haven’t even considered other options. But as many other industries have discovered, this isn’t sustainable in the long-term. The share of live-TV watchers is going to shrink — and if live HD sports become widely available on the internet, it’s a wrap — and many distributors will find themselves out of a job. I could be wrong, but I just don’t see how they can save themselves.

I'm generally wary of declaring any technology "dead" or "dying," for the simple reason that it is easy to forget the size of the status quo and attribute too much weight to early adopters. Let's go through the numbers. 58.4 percent of all American homes subscribe to some form of cable television; in terms of actual people, that comes to at least 150 million Americans, or about half of the country. Even with cable subscribers dropping by the hundreds of thousands, it would be years before "cord-cutters" rivaled subscribers at all. Moreover, it's not necessarily the case that those who don't have cable are choosing to go without; cable is less common in inner-city and rural areas, where residents are disproportionately lower-income (and have limited access, in the case of rural dwellers).

What's more, limited broadband penetration and slow Internet speeds create a limit to the number of people who could switch to a Web-based television regimen; only 42 percent of American households have broadband, and the average broadband speed is a paltry 3.9 megabits per second (by contrast, Japan has an average speed of 7.9 megabits, and South Korea has an average speed of 14.6 megabits). Those people could watch TV on their computers, but it would be slow and low (quality). Overall, that cable companies are losing subscribers doesn't actually imply that the Internet is becoming a dominant vehicle for watching television.

Of course, there is something to be said for the argument that cable distributors are on the decline, thanks to a poor economy and rising prices. Color me skeptical. Last year, in the third quarter of 2009, distributors added 346,000 subscribers. 2010 could be the beginning of a long, inexorable decline, but it could also be a momentary blip caused by cyclical forces. Indeed, if the economy improves and cable providers opt to alter their model -- to offer a la carte pricing, for instance -- we could see stronger, more lucrative cable providers.

Simply put, given the ubiquity and strength of cable distributors, it's very hard to say anything about their future, especially since cable distributors are also Internet distributors, and would still play a large role if Americans were to shift their viewing habits toward Internet television. Indeed, it's very possible that the future of television is traditional cable augmented -- but not replaced -- by the Internet (think Google TV, but without the needless complexity). Besides, as far as picture quality and breadth of immediate content is concerned, it's still very hard to beat cable.

In any case, consider this post a word of caution; it's far too early to say how the future of cable will play out, and predictions about its "slow death" are almost certainly premature.

-- Jamelle Bouie

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