Once upon a time, television was one of the more important and popular forms of entertainment for the majority of Americans. Families would gather to bask in its neon glow, while their favorite personalities and characters went about their business on the screen.
In 2010, the share of homes with traditional video reached its peak. That was when the cord-cutters came, touting their streaming television services as a revolution for viewers everywhere. Today, more than 10 million homes have already cut the cord or simply haven’t had pay television since the 2010 pay television zenith.
Traditional Television Companies Adopt Streaming Strategies
Despite their attempts at stemming the tide, cable and satellite television providers lost another million customers in the last quarter. These companies had already been trying to establish their own streaming TV services, but now the pressure is really on.
Skinny bundles like Dish Network’s Sling TV and DirecTV’s DirecTV Now are growing, but not fast enough to slow the hemorrhaging. In fact, according to some experts, skinny bundles may be making things a lot worse for satellite companies. Unlike cable companies, that are still selling high-speed cable internet service like gangbusters, satellite is essentially a one-trick pony.
Matthew Niknam, Deutsche Bank analyst, estimated that pay television providers have a profit margin of about 38 percent on traditional pay television bundles, but a negative six percent margin on skinny bundles, according to The Wall Street Journal. When it comes down to it, the more skinny bundles Dish and DirecTV sell, the more money they lose.
Cable TV Embraces Streaming TV Services
Many of the smaller cable television companies are going with their strengths.
Instead of trying to outwit the cord cutters, they are finding ways to encourage these interests while increasing profits. By offering access to streaming products through their set-top boxes, cable providers like Comcast Corp. can remain relevant in a world where entertainment comes from the Internet.
Comcast’s X1 set-top box gives subscribers access to Netflix, YouTube, SlingTV International and will be adding Amazon Prime soon. This is a good start, but may not be enough to peel people away from Apple TV, Roku, Fire Stick and smart TVs, all devices that offer a la carte television options.
Over the past decade, television has changed dramatically, but pay television companies have been slow to follow. Other than ensuring that internet subscribers have the bandwidth they need to stream their favorite television shows, much of the response seems to be too-little-too-late for these traditional providers to retain a decent share of the fragmented television subscription market.