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Cutting the Cord in a Coronavirus Climate

Faced with a future of decisions based on economic impact, consumers are heading towards a home without cable in favor of internet-based streaming services.

Cable television, which has been what could be considered an American ‘staple’ has been in our homes since its development in the 1950’s and its more widespread entrenchment in the 1970’s. Originally developed to improve the availability of programming as well as reception of over-the-air broadcasts, Cable TV has been a major factor in the development of widespread technology, strides in advertising, access to major events, and one could even make a point for cable helping to create family traditions and values. I think of Saturday morning cartoons, or gathering around the family television for our favorite sitcoms, scanning TV guide for when we get to see the next episode of our favorite drama, or the season premiere that we spend all week looking forward to watching.

An Industry in Decline

What happens when cable goes to the wayside in favor of new technology? As it is, Cable companies saw their usage peak around the year 2006, and since the establishment of cheaper and easily accessible streaming services, companies report a gradual drop off of subscribers steadily throughout the last several years. Unlike cable, streaming services such as Netflix, Hulu, and Amazon streaming have readily available content that can be tailor-made to a specific user, and have completely user-curated shows and movies. Streaming services have even commonly taken to put an entire season of a show up at once, which means no weekly episodes, no waiting impatiently after a cliffhanger, and with an increasingly sedentary society, ‘binge-watching’ is currently en-vogue. Even household names such as CBS and Disney have switched up their repertoire to include exclusive streaming services.

While cable is still widely used, their services have been seeing declines in a subscriber base since the development of streaming services. Looking at more recent years, according to Business Insider, there has been an increase of Americans deviating from cable and satellite television. In 2017, there was a 3.6% decrease in subscribers, subsequently followed by a 4.3% decrease in 2018, and with a further decline of users in 2019 of 6.4%.

That was all in a pre-Coronavirus world. With the onset of coronavirus throughout the United States, American families are taking a different approach to entertainment. Rapid and large unemployment numbers are currently making many households make decisions based on price tags, shedding off any unnecessary expenses, and looking ahead to their financial futures. Comcast, one of the largest cable and satellite providers in the U.S. are reporting nearly half a million users unsubscribing from their services so far this year, which is just under half of their total 2019 cord-cutters.

Sports and a Modern Economy

 

You might consider that cable still has a lot to offer. Show production has been delayed by the coronavirus, sure, but TV and movie companies are still releasing a fair amount of content, so besides the cheaper alternative of streaming services, what has America lost in the wake of the contagion causing a sudden drop off of service providers? The answer here is simple: Sports. Sports programming has long been a field (no pun intended) dominated by cable companies. Cable deals themselves are multi-million-dollar enterprises held by the NFL, MLB, MLS, and many other sports leagues. Besides the money that is to mutually be made between sports teams and cable companies, it is one of the major deciding factors in keeping or dumping a cable subscription for the average user.

It’s not only league play postponement that has cable companies waning, but the delay or cancellation of major sporting events. NCAA’s March Madness, the 2020 Olympics, the PGA tour, NASCAR racing, and the 2020 Masters, give less of an incentive for consumers to continue with cable services. As it is, major players in sports broadcasting such as ESPN are having issues filling massive time gaps. Altman Vilandre & Co. conducted a telecommunications survey in 2019 indicating that roughly 80% of all regular sports viewers pay for regular television vs. only 60% of non-regular sports viewers. Considering that live sports could be an indicator of a person’s willingness to pay for television, without it there could be a real push for this demographic to drop subscriptions altogether.

This does raise the question of a relatively new market; streaming services for sports. YouTube, a website dedicated to online videos and a dominating internet enterprise, released YouTube TV; allowing people to watch and DVR live shows and sports. Casting a very wide net in its sports programming, YouTube TV covers everything from fish and wildlife sports to womens golf to the Kentucky Derby. With the decline of cable, will more streaming services catered to sports lovers rise in its place?

Cable Companies Pushing Ahead

With fewer alternatives, the seemingly recession-proof cable industry did not see nearly the drop off it is currently seeing during the economic crisis of 2008.  With unemployment claims rising month after month, sitting currently at over 6.6 million claims, it is clear that the next few years may be a time of recovery for a lot of people. With household averages of cable coming to roughly $107.00 a month coming to over $1000.00 a year, easing financial strain may have to begin with cutting what people maybe soon to consider luxuries.

Telecom, Cable, and Satellite Senior Analyst Peter Supino via Alliance Bernstein some major subscriber drop-offs this year from TV provider giants such as AT&T, Comcast, Dish Network, Charter Communications, and Altice. As unemployment continues to rise, Wall Street continues to adjust their predictions as well for the cable industry, with increases of subscriber decrease reaching hundreds of thousands, if not millions of consumers. Longer-term disinterest in cable may also arise, as the question of whether or not Americans impacted by coronavirus or other economic instabilities will return to the cable industry.

However, in contrast to tv stations and broadcasting networks, cable giants may not feel the burn of an economic downturn thanks to their diversified product, which is not limited to cable but also internet: home to the in-demand streaming service. Another saving grace for these companies? An American desire to stay well-informed and up to date on the latest news. Both national and local, news really presses on a lot of the hard-hitting hot button issues that can potentially impact an entire nation.  The event of a recession due to coronavirus is not necessarily set in stone, but as families take a look at their monthly budgets there could be both a temporary and even lasting change in expenses, including television.

 

 

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