As we have been discussing throughout the blog, the world we live in is being rapidly disrupted, and the TV and cable industry is not immune to this as people are “cutting the cord” and moving away from cable. There have long been alternatives to cable, but now they are finally becoming practical and affordable to the general public as people are tiring of being bullied by cable companies by being charged obscene prices for, most of the time, bad service. This has led to the cord cutting generation canceling their cable subscriptions and moving to cheaper alternatives to watch their favorite shows.
Services like Chromecast used to be considered a luxury, but now that they had added more selections and become more affordable, these services are becoming more and more popular. Adding Chromecast to your home for $35 along with a few other complimentary services that fit your viewing pleasures can still save consumers hundreds of dollars each year, as the average cable bill comes in around $65 per month.
On top of Chromecast, Netflix, and Hulu, Apple TV is in the midst of launching a “cable-killing app.” Apple is currently negotiating with CBS, ABC, NBC, FOX, and each of their local affiliated networks to get the rights to each of their live TV streams. Subscribers to Apple TV will also be able to receive their favorite channels, including ESPN, Discovery, and Disney, just to name a few. Apple will also have HBO available, allowing them to cover almost every possible platform consumers currently pay the cable companies for. This is the first time that a “cord free” service will be able to offer live sports, separating Apple TV from the rest of the industry and putting the cable industry in serious jeopardy. Apple is currently in discussions with the NFL along with Patriots owner, Robert Kraft, to give Apple the rights to broadcast live games on their app. Currently, Apple TV has the rights to offer NFL Game Pass to subscribers which offers live out-of-market preseason games, as well as all regular season games available the next day, on demand. If Apple can continue negotiations and get the rights to broadcast live NFL games, similar to Yahoo’s free international broadcast of the Buffalo Bills vs. Jacksonville Jaguars game in London this past weekend, the cable industry will struggle to survive that blow, as Apple TV subscriptions again fall well under the $65 per month consumers pay for cable. However, until this happens, cable companies still have a huge advantage when it comes to the sports fan because there is not a cord free service that currently offers every option of live sports that viewers can get through cable.
With 12.3 million households, or 11% of television watchers are using cord free broadcasting, investors are beginning to have shaky confidence in the media industry. Analysts at Goldman Sachs still believe that currently, cable tv is a sound investment, but is becoming much riskier with the advancement of cord cutting and the emergence of the plethora of alternatives consumers can switch to. These alternatives can be combined to form affordable, inclusive television packages that can cater to each type of viewer and are still cheaper than cable and can be seen in the video below.
With all of theses alternatives, cable companies need to learn from past disruption, like Blockbuster, to avoid acting once it is too late and all of their customers are gone. Cable companies need to act quickly to lower their profit margins, so prices can be lowered and services can be improved. By lowering prices and upgrading their services to provide better quality as well as features similar to Netflix and HBO, the cable companies will be able to keep all of their current customers and avoid the collapse so many other industries and companies have seen because of disruption.