Web video isn't killing cable subs...yet

Web video isn't killing cable subs...yet

Summary: To hear the prognosticators and media tell it, cable subscriptions are being supplanted for video services like Hulu. A recession, free Web video and cable costs add up big problems for cable providers.


To hear the prognosticators and media tell it, cable subscriptions are being supplanted for video services like Hulu. A recession, free Web video and cable costs add up big problems for cable providers. The reality may be very different, says Bernstein analyst Craig Moffett.

In a research report, Moffett notes:

Amid all the prognostications of disintermediation of the gatekeepers and families disconnecting (expensive) Pay TV in favor of (free) Hulu.com, it is noteworthy that the number of Pay TV subscriptions in the United States actually grew in Q4. And this in the midst of the worst recession in three generations. The  final numbers won't be known  until Dish Network (and a few others) report, but at least based on the data from those video providers who have reported thus far – a  group  comprised  of  the  TelCos, DirecTV, and  the  three  largest cable operators –  there were 441K subscribers more families  paying  for Pay TV  subscriptions at the end of the Fourth quarter than there were at the start. That compares to 396K subscribers added in the Fourth Quarter last year by the same group.

Moffett then follows up with this chart:

The takeaway: Cable is losing subscribers...to satellite TV and telecom providers. That means the hubbub about Web video denting cable companies and spooking the hell out of giants like Comcast and Time Warner Cable may be misplaced. Web video isn't killing the cable star yet. However, cable does seem quite busy reportedly cooking up ways to take its on-demand video to the Web too.

Moffett continues:

Video cord cutting – notwithstanding comments to the contrary from Time Warner Cable CEO Glenn Britt, who cited cord cutting as a headwind – still remains the province of urban myth.  It certainly sounds plausible enough… but there's simply no empirical evidence that it actually exists.

The argument here is that consumers are hanging on to cable subscriptions, but cutting voice lines. Web video may have its day, but not yet. The operative word may be yet.

Will Web video really supplant cable subscriptions?

Also see: The Web video showdown: Content providers, cable companies and users

Topics: Mobility, Hardware, Networking, Telcos

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  • Channel Surfing

    Channel surfing is still in our blood, and it will be a while until that changes.
    Streaming Netflix to my Tivo is not always 100 stable, but if Tivo adds Hulu, I will be one step closer to cutting off cable!
  • yet....

    Then Time Warner will join the RIAA and start suing former subscribers. Does anybody at TW look at their losses? Could it be an overpriced service that offers less than the competition?
  • Raises Hand.. Im one of those no cable people..

    We recently moved and had the chance to re-evaluate all our services including cable and internet. Initially, we tried to get "naked" internet from time warner, which they didnt want to do and we ended up with 20 worthless channels and their mid-grade internet for ~$60/month.

    I have a pc right beside my stereo equipment with wireless trackball (99% of control) and keyboard directly plugged into a 42" HD TV.

    After a month of this, a local provider came by offering "naked" internet at faster speeds with no tv for ~45 a month so we took the plunge.

    The only drawback we have found is there is not really a "mindless" mode where the tv just drones on all day making noise. You actually have to **pick** what to watch.

    Another thing I found/read which makes sense is that all the primetime and popular shows are in limited legal availability because the networks get such a huge chunk of cash for selling the shows to the cable networks. You will notice only 4-5 shows available in general for these type shows as the networks are holding on with their last breath to that money.

    Considering before we moved we were paying around $110 a month for internet and expanded cable (TWC) we are pretty happy with the solution and have no need for forcefed entertainment anymore. Just get the rest of the content online already..
  • cable companies are idiots

    Cable companies really need to start offering streaming content of all their channels on their own websites for their paying customers. That way if their customers decide to cut the tv off, they can keep paying for the same content online, so they don't lose a penny. Add to that the convenience of being able to get all your favorite shows whether you are at home or on a business trip, and you have yourself a winner.

    I see no reason why cable companies couldn't create their own web portals on their own sites in order to compete with sites like hulu (which is not very complete, if I say so myself). They already have the licenses to broadcast all of their material, and they own the bandwidth of their networks, so there's just no reason that this couldn't work.
    • Cable companies would............

      look at that ans say it would undermine the cable TV service, If they was to do something like that you bet they would charge you to have that ability.

      Cable providers are price gouging cause most if not all of your local Cable providers do not have another local Cable provider to compete with.

      The cable providers are only digging themselves into a grave.

      what do you think would happen to a local Cable provider if another cable provider stepped in and started to compete with prices to your original local Cable ISP high prices and provided the same services? a long and painful price war between the two and only the original local Cable provider would suffer losses .

      • Cable companies would......but they can't

        The cable companies, like the telephone companies are FCC regulated. That is why you see them offering packages instead of offering to sell you individual channels. Web streamers are not bound by those rules, so we end up getting fudge packed in the end by the hard wired TV providers... Thank you Uncle Sam! He is the one you should be screaming at.
  • RE: Web video isn

    I watch a lot of my TV on Hulu. I think the cable companies should have a way to stream their programs online. Perhaps this will give way to pay per channel. Pay for the channels that you are interested in, instead of paying for the entire package
    Marcelle Green
  • RE: Web video isn

    When Comcast and others put a cap on net useage, I predicted that this was exclusively done to hobble the usefulness of Hulu.com, etc. Some didn't believe that there was a connection, but you watch. When Comcast starts offering online video on demand to compete with Hulu. The cap won't apply when you're buying content from them.
  • In the process of breaking free.

    In the past weeks I have been looking at what i can do to eliminate my cable TV and Phone. I am just having a lot of trouble justifying the cost of even basic cable, and the land line.

    Over the past couple weeks I have successfully converted all my home TV's to view web based media, while still keeping cable active. Using an XBOX, and a spare laptop i had laying around.

    Network and internet "appliances" are already being produced, but without an internet standard for this type of entertainment, i needed to hobble it together to ensure we get everything we want.

    There is enough out there now to make the switch if you live in a metro...

    1. Some major networks have a majority of their popular programming available via the web.
    2. Hulu and Netflix provides plenty of "on a whim" entertainment CATERED to you.
    3. The introduction of the Digital change over, has made it easy for anyone in a metro to get excellent tv from the local networks over the air.

    The biggest problem i see is that you need to wait for some items to find their way to the web.

    The second biggest issue is the necessity of hard wired network connectivity to your entertainment centers.

    I figure with my current set up, my television costs will be $0, given our households viewing habits. Others I can see getting to less than $20/month.

    As far as the landline goes, its a hard one depending on your land line usage. In our case, its primarily to supplement our mobile phones and to provide a number other than our cell to utilities and other one off companies that may or may not add us to a call list.

    Its possible, it can be done now, its a matter of time before Comcast and others catch on and begin offering subscriptions to streaming media, and home phone pricing models that follow the mobile networks.

  • RE: Web video isn

    With ATSC, broadband internet, and my favorite shows hosted on the network web sites a few days after airing, I haven't missed cable much at all. I certainly don't miss the exorbitant costs of cable and satellite.

    Sure the quality of internet TV isn't very great, but then I didn't much like paying extra for "HD" channels on cable and seeing pixelation.
  • RE: Web video isn

    Hey, Windows 7 crashes about once every twelve minutes since I installed Office 07. But hey, I'd count on windows to deliver what cable tends to do with no issues. NOT!!!!!
    • who said...

      ...anything had to be Windows? Let alone a Beta OS?...don't like MS, fine, get Apple TV.

      I don't think the point of this was to pick an OS. Its about the future of entertainment, and I don't care if you are speaking of a PC, a MAC, a Refrigerator or a TV. There is some kind of controller in there that you will need to trust a developer to, and 10:1 they also develop Windows apps.

      There are plenty of other venues for you to trash MS. Personally, i like all OS's and their specific niches.

  • RE: Web video isn

    I had TW cable. i had the internet, digital phone, and TV and it all came up to $130 a month, that is allot of money in this time. i use to have AT&T DSL and i only had phone and internet and it only came up to $33 a month. who do you think i dropped to go back to. that's around $50 extra a pay i have in my wallet to put into my cars gas tank.

    yes DSL is slower in some ways when compared to cable, plus DSL isn't blocking ports like the cable ISP does. i hardly ever watched TV (i just watch stuff online now) so it was a more logical choice to drop TW cable and go with someone else as my ISP.

    my local TW cable will not allow you to remove the TV service without removing the ISP and if you remove the ISP you also have to remove the phone service, the reason they told me why they have it that way is if you only had the ISP and phone you would basicly be paying more per month for the service then if you got the bundle (like around $60 per service a month). if you ask me TW cable is hurting themselves.

    right now they are setting the price point cause there is no other local Cable provider to choose from so they sky rocket the price, that is why satellite providers and AT&T are way above cable providers in subscribers.
  • Only if I can get access to sporting events as I do on satellite TV

    I watch mostly sports on live TV. I can use Netflix to watch the various series I like, and Hulu is an option too for the Simpson's and 24. But until all the football, hockey, baseball and basketball, college or pro, are available in a format I can watch on my 50" HD flat screen using the web, I will stick with the satellite. I am a recovering Comcast customer and I do not miss their low quality support and flakey service one bit.
    • live sports is the biggest issue

      If you can't get espn360, you can only see your
      local TV events on an HD antenna, that's the
      worst part of going off satellite/cable.

      Other than that, I haven't had a landline in
      years, and no more DirecTV with internet TV
      (hulu, joost, plus the network sites).

      Between the phone and the satellite, saves me
      over $1400/year.
      • That's what the sports bar is for

        Want live sports? I prefer to watch at the local sports bar, giant TVs, friends, and cute waitresses. Free snacks too!
  • What's cable? or Dish?

    Wow - I weaned myself from the cord years ago. I get a phone/internet package for $30 a month. That included a free wifi setup for the house, installed. Since I primarily use my cell/smartphone for calls, I couldn't even tell you my land line #. The TV's for DVD's only - did they go digital or whatever yet? I really don't care. I prefer web content that's not even on cable (e.g. Dr. Horrible)
  • RE: Web video isn

    Well based on the Google TV I think is going to do some damage. With the pricing and offers that DISH gives you but, not only that DISH has the cheapest prices in the pay-TV industry. So with that you get to keep value and enjoy more. The features with Google TV like all the apps and the features. I like that it integrates with my receiver and now when I search it pulls up on my DVR side and internet and weather I want to record watch the features don?t end. I like the VOD Amazon and that Netflix are avail. I like to watch the You Tube right from my TV too in HD. This is going to allow keeping your subscription as well as enjoying the internet all in the same spot.