Is cable TV dying? Here's where cord cutting stands now

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Tame your budget-busting cable bill with these money-saving tips!
USA TODAY

The death of the cable, or traditional pay-television, business has been predicted for years. It’s a prediction based on the idea that consumers are dropping expensive pay-TV packages in favor of cheaper online streaming products.

It makes sense. New innovations often cause old industries to disappear or become a shell of what they once were. Streaming music, for example, has mostly destroyed the business of selling records and CDs, while wireless phones have relegated landlines to something your older relatives have.

Still, if cable is dying, it’s not going quickly. The industry has been losing customers to cord cutters, people opting to drop cable in favor of streaming services or other digital options, and the number of lost customers increased in 2017; but still, getting smaller and dying are two very different things, and it may be a little early to consider cable in danger of death.

More:Even the guy who put ‘The Simpsons’ on Sundays has cut the cord

More:Spectrum wants you back: cut-rate Internet TV package targets cord-cutters

How bad is cord cutting?

Cable (a category that includes cable, satellite, and cable-like digital subscriptions) has been losing customers since 2013 and the pace of those losses have picked up. After roughly tripling in 2015, numbers doubled each of the past two years.

Data source: Leichtman Research Group.

As you can see on the chart above, pay television losses have accelerated, but cable companies that also sell broadband have more than covered their losses by adding internet customers.

It’s also important to put these losses in perspective. Since 2013, cable has gone from being in around 95 million homes to being in 92 million now. That’s a drop, but it’s hardly the death of an industry, though the trend should certainly worry pay-television providers.

If losses continue at this pace, then the industry will lose 3 million customers in 2018 — about the same amount it has dropped over the past five years. It’s not certain, however, that the trend will continue at that pace.

A shift has happened

The biggest losers in the pay-television business are ATT‘s (NYSE: T) DirecTV and Dish Network (NASDAQ: DISH), which lost 554,000 and 995,000 satellite subscribers, respectively, in 2017. Those companies, however, are also the biggest winners, as their streaming, internet-delivered cable products DirectTV Now and Sling TV added 888,000 and 711,000 subscribers, respectively.

That shift may show the future of where pay television is going. Customers still want a cable-like package, but 3.3 million of them have moved to the satellite company’s cheaper streaming services. That’s sort of a compromise. It’s more shaving the cord than cutting it — but it shows that consumers are making budgetary shifts.

Big cable has to get flexible

Comcast (NASDAQ: CMCSA) and Charter (NASDAQ: CHTR) only lost 151,000 and 239,000 cable subscribers in 2017. Those are modest drops for the two biggest traditional cable companies, and they were more than offset by each company adding over 1 million broadband customers.

Going forward, however, streaming services and cable-like internet products will become stronger alternatives for consumers. Getting a Netflix and a Sling TV subscription costs just over $30 a month. That less than half of what the average American paid for expanded basic cable in 2015, according to the most-recent Federal Communications Commission data released in 2016.

The cost has likely risen for most cable subscribers since then. Even if you assume cord-cutters lose $5-10 in bundling savings if they cut the cord, it’s easy to see why dropping cable is appealing.

To combat that, cable companies are going to have to create their own skinny bundle packages — services that offer fewer channels for less money that keep consumers from leaving. That’s a bit of a tightrope to walk, because you don’t want to cannibalize your own high-paying customers base in order to keep would-be cord cutters with low-cost plans.

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Columnist Kim Komando helps you navigate services, hardware and content if you’re ready to ditch the TV bill.
Kim Komando/Special for USA Today

Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Netflix. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

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