In the years ahead, buying cable Internet as an add-on to your TV package might seem like a memory from a simpler time.
That’s because many Americans are opting to skip the television part altogether and instead getting faster broadband connections.
According to Shalini Ramachandran and Martin Peers at the Wall Street Journal, Cablevision CEO James Dolan is the first of his colleagues to publicly acknowledge this reality.
Mr. Dolan noted that younger users like his own children prefer to watch television via online services like Netflix over the packaged channels that cable providers offer today.
Because of this, he thinks that the current cable-TV industry is in a “bubble” that will burst when the youth of today become the mainstream consumers of tomorrow. With the massive infrastructures needed, it may not even be worth it for cable companies to offer TV after the bubble bursts.
That trend may have already started. The WSJ piece indicates that Cablevision has been losing video subscribers while picking up new broadband customers.
But Cablevision is a rather small cable company. While it has a strong presence in the New York area, it is only the fifth-largest provider in the nation with its 3 million customers. How are its bigger competitors doing?
Om Malik’s recent post on GigaOm suggests that the trend may be a nationwide phenomenon.
Comcast, the country’s largest cable provider, lost 159,000 video subscribers last quarter. It also gained 187,000 broadband users.
At that rate, Comcast will have as many broadband subscribers as video subscribers in about 5 quarters. While the revenue coming in from its TV subscriptions will likely still be higher by that time, such a shift will only increase the number of users relying on the Internet as their sole source of video content.
Netflix has proven that it can compete with the cable networks at producing top-tier content. CBS’s battle with Time Warner Cable over “retransmission fees” (how much they charge the cable company to show its broadcast channel on cable) has led to some of the summer’s biggest hit shows “Under the Dome,” “Dexter,” and “Ray Donovan” being blacked out in major cities across the country.
If subscribing to cable TV doesn’t get you the shows you want, what’s the point? With rumours that the blackout might last as long as six weeks (until the NFL season starts), a significant number of Time Warner customers might decide that paying for cable simply isn’t worth it. That would only further convince others who have been on the fence that they too can get by with using broadband and online video services alone.
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