Cable TV – Sword of Damocles pt. VIII

All looks downhill from here.

• The 70^th Emmy Awards are showing that the premium streaming services are making most of the quality entertainment these days which is only likely to accelerate cord cutting by USA consumers.
• Over-the-air (OTA) transmission will be further boosted by this trend (see here).
• Netflix topped the list for the first time with 23 awards, of which 7 were in the prime-time category despite missing out on the most prestigious categories.
• These went to HBO which also earned a total of 23 awards.
• Overall, the streaming services took 35 awards with Amazon and Hulu also faring well.
• It is well known in the media industry that content is king, and the streaming services are rapidly becoming the go-to place to watch premium entertainment.
• I think that this means that, increasingly, users will wonder why they are paying over $100 for a cable subscription when most of the content they watch is only available elsewhere.
• This leaves the cable TV companies with only fast and reliable broadband Internet access as a desirable product.
• This has already be observed as in 2017, 56% of cable TV subscribers said that they only keep their subscription in order to get access to fast and reliable internet (see here).
• I suspect that this number will rise this year.
• This is also under threat as one of the best use cases for the new wireless technology known as 5G is fixed wireless access which Verizon is already close to launching.
• 5G’s ability to use huge blocks of unlicensed spectrum combined with sophisticated tricks with radios and antennae would enable cost-effective competition with both fibre and cable delivered internet access.
• Furthermore, with no requirement to dig up the roads and (potentially) user-installed receiving units, the cost to roll it out would be far lower.
• This would make it possible to have very competitively priced internet-only access in the USA for the first time.
• With this scenario, the cable companies will either have to cut their prices massively or face losing most of their business.
• Either way, I think this represents an existential threat to the cable tv industry that will need to rethink its proposition to survive.
• I suspect that the result will be much smaller, more innovative but less profitable cable companies offering better customer service than they do today.
• The alternative is to be remembered as case studies of dominant companies that fell by the wayside because they refused to move with the times.
• I doubt that many of their customers would be sad to see them go.