Cable Facing Significant Challenge from Non-Traditional TV | Koeppel Direct

Cable Facing Significant Challenge from Non-Traditional TV

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People are cutting the cord faster than ever, if new figures from cable TV providers Charter, Comcast and AT&T are any indication.

Charter lost 122,000 video customers in the first quarter, over three times more than Wall Street’s projected 40,000. The massive surprise sent Charter stock tumbling, dropping 12 percent and becoming the biggest same-day loss for the company since 2009.

Changing Viewing Habits: Winners and Losers

As American viewing habits change dramatically, several large companies that depended on selling traditional pay TV bundles are taking huge baths. Verizon’s Fios TV lost 22,000 subscribers in the first quarter and even AT&T’s DirecTV Now and Dish Network’s Sling TV can’t seem to stop the massive flow away from the old style of cable television.

The direct result of the nine million households to permanently cut the cord since 2015 is a huge loss of confidence in cable providers’ ability to remain competitive against global tech giants. They’ve been too late to address customer wants, leaving many of these companies scrambling to catch up to the Netflix and Amazon Prime crowd.

Because of this, market values are starting to suffer. Charter lost nearly $30 billion in market value since February. AT&T has dropped almost $50 billion. Even Comcast has lost $50 billion since January. On the other hand, Netflix shares are up 62 percent this year, adding another $52 billion to its market value.

Other Players in the Market

Increasingly, investors talk about pay television like it’s already a bygone thing, but the on-demand market is still growing and finding its feet. There is increasing competition in the non-traditional television market, even as Netflix continues to wear the crown.

Amazon’s Prime now has more than 100 million subscribers and Google’s YouTube is developing a TV streaming service of its own. Facebook and Apple are both investing over $1 billion in original programming this year, with the aim of pulling even more viewers to these new media streams.

Even though the future looks pretty bleak for cable television, Charter cable was able to increase cable TV earnings to $168 million in the first quarter, an eight percent bump. Overall revenue grew five percent to $10.7 billion, mainly due to broadband revenue increases, higher cable bills and ad revenue growth.

 

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