It is amazing to watch industries completely collapse before our eyes. The difficulties in the physical retail sector are well known. We also see the transition away from paper that is causing issues in the copier/printer industry.
One industry that got a lot of recognition but really is flying under the radar in terms of the collapse is the television industry.
The term "cord cutting" is well known. This was something that started over a decade ago. People found they could dump cable television and get their entertainment needs met using the Internet. The pricing of broadcast television has keep going up which is causing even more people to consider alternatives.
This is probably the biggest factor: competition. Netflix was probably the first platform to really take on a large percentage of the viewers. While it did not provide all of one's needs, it did fill a big gap. Add in the explosion of YouTube, addition of Hulu, and entry of the likes of Amazon into the entertainment field, we can see how people can meet their needs through alternate means.
Are we now to the point of the death spiral of television. For a long time, Wall Street analysts have speculated how the television model is not sustainable. This year, 2020, could be the point where this kicks into overdrive.
"As a whole, traditional cable TV has probably now entered what economists call a death spiral. Most programming contracts are for 3 – 5 years and the cable TV companies already know of the big programming cost increases coming for the next few years. As cable companies keep raising rates they will lose more customers. The programmers will likely try to compensate by raising their rates even higher, and within a short number of years, cable TV will cost more than what most homes are willing to pay."
Content providers are going to continually ask for higher prices from the delivery mechanism. Whether this comes from cable or streaming, the result is still the same. As content providers push up costs, those have to be passed on to consumers since the entertainment world is run by public corporations that have to keep increasing profits each year.
"It’s no longer good enough for corporations to make money, they are expected to increase bottom line quarter after quarter, year after year. We’ve only been talking about cord cutting for a few years, but the industry has been declining for over a decade. In 2010 there were nearly 105 million subscribers of traditional cable TV, and that number dropped to just over 83 million by the third quarter of 2019. It’s easy to think of cord cutting as a recent phenomenon, but the industry has been quietly bleeding customers for years. Sadly, the programmers are still denying the reality that they exist in a dying industry and are likely to continue to raise rates like Fox just did."
This shows you how bad things are for the cable industry. A drop of 20 million subscribers in a decade is stunning. The situation, unfortunately for them, is only getting worse.
AT&T, for example, has already been losing customers hand over fist, and things are about to get worse. Despite having spent hundreds of billions on DirecTV and Time Warner mergers with an eye on dominating the TV sector, AT&T began 2020 with 15% fewer TV subscribers than it started with in 2019.
One of the biggest television providers in the United States, is starting off the new year with 15% less subscribers as compared to a year early. A repeat of this will mean a two year drop of roughly 25%.
These numbers are truly not sustainable. If the losses continue at this rate, the world of television will be completely different in a few years.
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