Cable TV Bills? Not Going Anywhere

Hulu, YouTube, and other Internet sources of movies and shows notwithstanding, consumers will still turn to their TV sets for entertainment—and pay cable companies for the privilege. Pro or con?

Read the debate by guest columnists Ron Frankel and Ryan Lawler and watch the video with Bloomberg cable-TV analyst Paul Sweeney

Pro: The People Want Their Sopranos

Lose ESPN, Disney, Nickelodeon, Discovery, and E!? No way. Which is why fewer than 5 percent of subscribers will sever their pay TV relationships.

People love watching TV, now more than ever. The average 40-year-old watches 40 hours a week. TV viewing is up 22 minutes per month, and 91 percent of TV households pay for TV subscriptions, according to Nielsen. And though they may complain, most folks will keep paying their cable bill.

Why? Because the best content is available only through a pay TV provider. And as for those few seriously considering a switch to over the air (OTA) or Internet options such as Netflix, Hulu, iTunes, Amazon, or YouTube, they will find lower quality and limited offerings. This doesn’t even count the hassle factor of slogging through websites figuring out where content is and when it can be viewed. Plus, attach an antenna to the roof lately? Moreover, anyone thinking they’ll cut costs by “cutting the cord” may be disappointed as costs for content increase across the board, whether at Netflix or Hulu Plus or on a cable bill.

Pay TV is here to stay not only because of compelling content, but also because cable, satellite, and telecom providers are pumping up their online offerings with initiatives such as TV Everywhere (TVE), which permit consumers to access TV programming any time, anywhere, on laptops, smartphones, and tablet devices. HBO GO made its debut with 4 million fans downloading the app to watch True Blood and Game of Thrones. Now 85 percent of HBO GO users are watching more HBO content and reporting higher customer satisfaction than ever before. Time Warner Cable also launched its live-TV iPad app, which was downloaded by 360,000 users in the first month, and the company will even subsidize subscribers using Slingbox.

Cable bills aren’t going anywhere.

Con: Gratis TV on the Web Is Too Tempting

Before the second quarter of 2010, the multichannel video industry—which includes cable, satellite, and IPTV providers—had never lost subscribers. But in three of the past five quarters, more viewers have stopped paying for TV than have started. And in the most recent quarter [the second quarter], pay TV providers lost as many 450,000 paying subscribers.

Think about that—an industry that had grown nonstop for more than three decades lost half a million users over three months. Of course, that has caused many to wonder whether declines will continue and whether they’re due to greater adoption of online video.

Ask anyone in the industry, and they’ll tell you that the problems it faces are saturation—more than 85 percent of households pay for TV, so there’s really nowhere to go but down—and a down economy. Ask any people who have gone without cable for whatever reason whether they plan to go back when the economy improves, and chances are they’ll say no.

The real problem cable faces is a weaker value proposition—due to ever-higher cable rates—and the emergence of more affordable viewing options. It’s difficult to ask consumers to pay $50 a month for TV when they can get unlimited streaming from Netflix for $7.99. As the availability of more content on new digital distributors becomes more common—and as those distributors find their way onto TV and mobile apps—the need to pay for live TV continues to dwindle.

Opinions and conclusions expressed in the Debate Room do not necessarily reflect the views of Bloomberg Businessweek, Businessweek.com, or Bloomberg LP.

Reader Comments

Robert Laughing

One must be brain-dead to be absorbed into the mindless collective, TV-orgs We cut the cable 8 years ago. Love doing it, with no regrets. When we travel and have it in the hotel room, it grosses us out--the stupidity, the endless, mind-destroying adverts, the racket of allegedly 'professional sports, and don't even mention the irresponsible goons at the NCAA. Get Netflix, Hulu, AMZN Prime, or soon, Apple TV. You'll find you can have a life without the leeches.

Greg

I agree with Ron on the issue of convenience. It's a lot easier to channel surf with a Cable TV channel guide than over the net. However, some clever scheme will likely emerge to fix this. AppleTV, Google, Amazon etc.

The one big improvement that might emerge for consumers is everything a la carte.

www.cordcutterguide.com

cm3kz0ut

Pro: The entertainment center is the flat screen in your entertainment room, secondly on your mobile device. For those sitting in front of a 60" Plasma, then the issue becomes one of price value. When the price of cable goes down, there is no reason not to have cable, since Netflixs, Hulu and others come packaged with the flat screen. It's a seamless event. Again, it's all about price.

sherman Mccoy

I stopped watching the idiot box 2 years ago. I read a lot more and surf the net for interesting videos. Terrestrial TV is an insult, and even cable has a lot of crap and reruns. The only way I'll go back is if they unbundle channels.

Paul

Do I like cable and the high bills it brings? NO.
Do I like the convenience it brings? YES.
So, will I keep my cable? Yes. The convenience
is worth it. 'Nuf said.

Nike Air Max 90

Yeah, the salary cap issue has really made me more and more disinterested in baseball as the gap between the haves and the have-nots has increased.

Frank S

It is all about personal preference and content. If you are a sports nut or if your family likes to watch Dancing With the Stars and similar weekly live events you will opt for cable. It is no fun to walk in the office and find out the ending without having had the time to watch the live event.

If you watch more general programming, the CSI shows, etc. you don't care when you watch it.

Cable/Sat TV is pricey but for those who want to watch live events it is the only way to go. The networks know this and thus the increase in live programming to capture market share.

The other factor is reception quality of over the air TV. Many folks who live in major metro areas have a challenge receiving quality digital signals the further they are away from the signal source. In the end it is easier to do cable/sat tv.

Frank

gosh

I recently called my cable company and asked them what they could do to reduce my bill. After declining the sales pitch I was offered $10 off my monthly cable bill with no catch. After accepting I was offered another $5 off for 3 more months. The lesson is call your cable company and ask for a lower price. If they won't negotiate, then go online.

Dannie

TV generally is a huge waste. The Cable news nets run the same lame adverts over and over and the same story line is usually presented by 10 different people at 10 different times. Depends on the channel as to the view point. The "Premium Channels" occasionally make a decent offering but again the pickings are meager for the price. So far no one has cornered the market on Internet Selections. Having too many to choose from is a luxury.

Adam

I hear a lot about these “cord cutters” online, but I have yet to meet one in the real world. They seem to be a very vocal minority. Almost everyone I know has cable or satellite. Those that don’t, never did (grandma and grandpa). Many of us also have a streaming service or rental service to supplement but never replace live TV. I need news, weather, and sports. I prefer to watch shows as they air if possible. Personally I have service from DISH Network. With them I get traditional TV access as well as streaming, disk rental, and TV Everywhere. I can even watch all of my TV channels from almost any device anywhere I go. I think it is about getting more value from the services we have rather then cutting the cord. It’s kind of like cutting off your nose to spite your face. Sure you save money, but at what cost?

Yocari

Cut the cord? Do it, but pay for the bandwidth. Cable and telecom will still have a place in your wallet even if you cut out television.

The a la carte alternatives should pressure cable providers to cave in and finally allow the customization of packages.

Last, beware, the gaming consoles are finally maturing as the new settop box; check out what good ol' Microsoft is up to with the X Box Kinect and gestures. Will Nielsen be tracking this usage or will Sony, Nintendo, or MS be the source out the usage data? Food for thought.

erik

All of you "cord-cutters" make me laugh. I see, in my head, a bunch of people carrying their devices and laptops around with them, mindlessly searching the internet for poor quality content with no organization. I have satellite, and it actually is not a very large cost in the grand scheme of things. I also like the fact that my Sat company is diversifying, bringing me TV Everywhere, tons of available movies, and has a great system of organizing the lineup so I don't spend half the time searching for things I might want to watch. Your fear of the TV companies is adorable though, guys. Enjoy your movies on those whopping 10-inch screens.

nfldanchor

I am tempted to cancel my cable, but the streaming services aren't where I wan't them yet here in Canada. I have two Apple TVs and watch Netflix more than cable. If we get Roku and Hulu plus, I will cut cable and go with Netflix and Hulu. Also can get local news and programming ota.

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