Cable Subscriptions Plummet: Is This Cord-Cutting Critical Mass?

Conventional pay TV is about to go the way of the dodo.

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Cable TV may still have tens of millions of subscribers in the U.S., but the writing is on the wall: Internet-based media is the future.

Thanks to new streaming services from the likes of HBO, Amazon, Dish, and even some sports networks, consumers are abandoning their traditional pay TV packages. Even the word "cable" has taken on a negative connotation, conjuring up nests of coaxial wires and ethernet cords. Streaming services and set-top boxes feel refreshingly modern and wireless in comparison.

Of course, the transition is still moving slowly thanks to the decades-long head-start cable has enjoyed in reaching American homes. But the levee seems ready to break.

A recent report from Strategy Analytics found that the top 20 cable providers suffered a collective loss of nearly half a million subscribers (479,000) in the second quarter of this year. Around the same time, researchers from Pacific Crest estimated that the number of households with cable has declined by 10 percent over the past five years.

The pay TV business suffered its first net decline in subscribers during the first quarter of this year. Tweet It

Meanwhile, Netflix has seen its American user base more than double since 2011 (from 18 percent to 38 percent). Another recent study projected that Netflix's audience will surpass that of ABC, CBS, NBC, and Fox within a year.

This trend isn't new, but recent numbers suggest the market is nearing a tipping point—a critical mass of cord-cutters. A recent Quartz article argued that pay-TV subscriptions likely peaked in 2012, while another study published in Variety showed that the number of households planning to cut the cord is also on the rise. In May, it was revealed that the entire U.S. pay-TV business suffered its first net decline in subscribers during the first quarter of this year.


What's behind this acceleration? In short, it's the acronyms: HBO, NFL, NBA, ESPN, AMC, CBS, and even UHD. In recent months, a slew of major broadcast networks, sports leagues, and content providers have unveiled methods to stream their content through the internet, and it's changing everything.

In July, the NBA announced that it will begin streaming games a la carte. The NFL now offers a host of services that allow you to watch games over the internet. Dish launched Sling TV in February, granting viewers streaming access to formerly cable-only content from the likes of ESPN, A&E, Adult Swim, Cartoon Network, AMC, TBS, and TNT. Add it all up and you've got a turning point for sports enthusiasts who worried that cord-cutting would prevent them from watching football, baseball, or basketball.

Then there's HBO, whose standalone streaming service, HBO Now, launched in April. Showtime quickly followed suit with its own standalone service. And all of this occurred as 4K UHD content continues to proliferate across streaming platforms, offering a picture quality that cable isn't even close to matching.

We've reached a point where virtually any worthwhile content delivered through cable can also be accessed through the internet. Tweet It

Meanwhile, hardware manufacturers are making it easier than ever to deliver all that content to your TV. Streaming dongles and set-top boxes from Amazon, Apple, Google, and Roku are all vying to be the entertainment platform for cord-cutters, competing with gaming consoles from Microsoft and Sony.

This is critical mass. We've reached a point where virtually any worthwhile content delivered through cable can also be accessed through the internet. The biggest problem for cord-cutters is that content is still balkanized. It's possible to select programming on an a la carte basis, but certain services are still only available on certain devices. It's especially problematic if you're a sports fan.

Still, the market is inexorably headed in one direction, and it's a trend even behemoths like Comcast (aka NBC Universal) can't ignore. If you haven't cut the cord yet, why not?

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