The Internet Is Officially More Popular Than Cable in the U.S.
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- January 2nd, 2014
You can’t call them “cable companies” anymore.
For the first time, the number of broadband subscribers with the major U.S. cable companies exceeded the number of cable subscribers, the Leichtman Research Group reported today. Among other things, these figures suggest the industry is now misnamed. Evidently these are broadband companies that offer cable on the side.
To be sure, the difference is minimal: 49,915,000 broadband subscribers versus 49,910,000 cable subscribers. But even assuming a huge overlap in those numbers from customers who have both, the primacy of broadband demonstrates a shift in consumer priorities. Nearly all the major cable companies added broadband subscribers over the past quarter, for a total of nearly 380,000 new signups. Cable subscribers don’t have to worry about TV as they know it going away any time soon. But cable is on its way to becoming secondary, the “nice to have” compared to the necessity of having broadband access.
Not Bad for Business
Such a transition might suit the “cable companies” just fine. I first saw these numbers pointed out by Peter Kafka at Recode, who wrote: “Some smart people suggest that the cable guys would not be unhappy if most of their business moved over to broadband instead of video, since there are much better margins—and almost no competition—for broadband.”
The better margins boil down to the fact that broadband is purely about access, while cable is about content. The crux of the cable side of the cable business is hatching deals with the makers of sports, news, and entertainment so there’s something to send through the box. And the costs can be steep. ESPN, the most pricey by far, tops $5 per subscriber per month.
With broadband, the cable companies don’t have to put anything through those pipes themselves. They just have to be the plumbers. They may not like the way Netflix and its more than 36 million U.S. subscribers are eating into their TV businesses. But Netflix and other streaming services are helping drive demand for broadband—a service cable operators can provide without having to serve up any content themselves at all.
TV’s Broad Future
What this means for the future of TV is still tough to predict. While these figures may suggest the inevitable transition to an internet-dominated future, nearly 50 million cable subscribers don’t appear ready to cut the cord just yet. Even with a plethora of on-demand options, people are still watching TV like they used to, which means a business model still based around ads and subscription fees. But that’s still a loss of millions of cable subscribers over the past half-decade, while the number of broadband subscribers has climbed at a much faster clip.
Meanwhile, traditional TV as a format already is being engulfed by the open-endedness of the internet. From mainstream streaming services like Netflix, Hulu, and Amazon Instant Video to niche sites like Funny or Die to YouTube celebrities—to name just some of the options that fall under entertainment—the kinds of moving pictures available and the ways to consume them have never been greater. Within this broader spectrum, cable as a concept could become just another niche, one channel among many as the insatiable internet swallows everything it encounters.