Cable TV is Dead..or Not?

[Martin Anaya]

The Demise of TV…Not again?

by Martin Anaya

Ok, I have a little confession for you. I am really tired of people talking about the demise of Cable television; how it is going on the trash heap of history along with the Walkman and laser discs. All this talk of Cable and broadcast TV going “bye bye” is beginning to get a bit ridiculous. I mean, haven’t we heard all this stuff before?

Look, in the 1950s, when television came on strong, the Movie industry went nuts. Everybody cried out that TV was going to kill cinema as we knew it; that folks would simply stop going to the movies so they could stay home and watch the free entertainment being provided by TV. It is true that millions of Americans rushed out and got a TV set and began watching but, the question was: “Did video kill the Movie star?” Did that in fact happen? Well, not unless you think that having the best recorded box office in the history of movies is the same as being dead.

Even when taking into account the horrible year Sony pictures had in 2013 plus several notable big-budget flops like Disney’s over-bloated Lone Ranger , last summer easily surpassed 2011’s previous high to post the highest grossing summer movie season ever.

Let’s put this into some perspective. To this day, many people still regard 1939’s Gone With The Wind as the biggest movie of all time strictly for attendance and I, for one, would never argue that point. After-all, before it finally left theaters some 4 years later, nearly half the population of the U.S. had seen it. Still, it took Gone with the Wind 4 years to amass 60 million tickets sold. By comparison, in fewer than 4 months, over 40 million people had already seen last Summer’s big hit Iron Man 3 . Yes, the population of the United States in double what it was in 1939 but here is my point: Even with a super crowded landscape of other popular media, the film industry is alive and well! Or more conservatively, let’s say, with over 40 million tickets sold to a single movie, it sure ain’t dead!

There were a lot of new technologies that were supposed to kill the movie theater. Anyone remember VHS and Beta? Then it was DVD and most recently Blu-Ray and big screen TVs. Folks argued that with the equivalent of a movie theater in our homes, no-one would ever want to go to the movies again. In hindsight of course we now know that home video has not only failed to kill the movies, it has become an important revenue stream to the motion picture industry. Now, let’s look at TV.

In February of 1983, millions of people tuned in to the final episode of MASH. It was said to be the single highest rated network TV episode of all time and perhaps the pinnacle of the broadcast model. This was just before Cable had really gained any foothold in the U.S. Of course, when Cable did show up in a big way, they said it would be the end of broadcast TV as we knew it; that alternative Cable networks like HBO with their innovative programming (The Sopranos, The Wire, Oz)) would slowly degrade and eventually destroy the broadcast model. Still, the 2012 NBC broadcast of Superbowl 46 between the New England Patriots and New York Giants saw a live audience of 111 million viewers domestically (not counting live free streaming) and fetched over 3.5 million dollars per 30 second commercial (also a record). It was the single highest rated TV event in history. Not bad for a dead medium.

So, despite its many dramatic successes, Cable not only failed to kill broadcast, it acted as a perfect complement to it, much like TV did for the movies. Now shows like Married With Children and Friends, which had long, successful broadcast runs found new audiences and new millions of dollars on Cable syndication. Cable and Satellite together have also, helped increase the penetration of broadcast to places it had never before reached. Has broadcast had to share some of its revenue and audience base? Sure. But they have also learned to use Cable resources to increase their value as NBC teamed up with Comcast and ABC merged with Disney and all their vast Cable resources.

Now we come to the latest Techno-boogey-man…The internet. Thanks to ‘alternative programmers’ like Netflix, Hulu and Apple TV folks are presumably turning off their TVs in the millions so they can watch on their I-pads and cell-phones (perhaps while at the store or in traffic). Yes, in fact, once again, TV as we know it is dead. It is now in its final throes and we are all instructed to get on the band-wagon or risk being run over.

Ok, so let’s take a look at this new phenomenan. Is it true that video delivery over internet is here to stay? Absolutely. But as my friend Tracy Swedlow’s Interactive TV Today points out ¹, while there is no doubt that tremendous opportunities exist for “cross platform distribution” of content to cell phones and other devices, it may be a bit pre-mature to assume that such alternative distribution channels mean the end of TV in our living room, or for that matter, cable and broadcast. After all, we must understand that it is the Cable companies who own the infrastructure these alternatives are using. The Cable companies have too much invested in that infrastructure to lose the game to a renter.

In fact, some internet technology stands a better chance to enhance your living room/cable experience than diminish it. In August of 2013 Nielsen released a report that, for the first time, provides evidence that Twitter activity drives increased tune-in rates for broadcast TV. The study showed that folks tweeting about their favorite program provided “a statistically significant impact” over the viewing habits of consumers ². The Cable companies already know this and today are developing new set-top boxes and technology to merge the internet and TV in a way that makes them virtually indistinguishable from one another. This means that consumers will use the internet to interact with broadcast shows and have the capability to take their TV anywhere they go when they are mobile. In short, the internet, much like TV for Cinema or Cable to broadcast, could end up enhancing and growing the Cable TV audience, not stealing it away as has been predicted.

Cable industry magazines have been planning for some time this “convergence” that I am speaking about. While it is true that some folks have “cut the cord” and gotten rid of cable and broadcast all together, they are a very small minority made up mostly of students, lower income households and those who are self described “non TV viewers”.

Here is a current snap-shot:

In a 2013 report to its members by the non-profit industry group TVB.org it was found that “Live viewing of television is still the dominant form of video consumption in the U.S. and younger baby boomers (age 45-54) are the biggest consumers of video media, averaging just over 9-1/2 hours per day.” ³

Among the study's other important findings:

• TV in the home still commands the greatest amount of viewing, even among ages 18-24.

• TV users were exposed to, on average, 72 minutes per day of TV ads and promos —dispelling a commonly held belief that modern consumers are channel-hopping or avoiding most of the advertising in the programming they view.

• "Environmental" exposure outside the home, while still relatively small at just 2.8 percent of total video consumption today, could nearly double during the next few years.

Percentage of U.S. homes with different forms of video media ³

56.9 % - Cable TV (includes Telcos like ATT U-Verse. This remains steady)

31.3% - ADS, Alternate Distribution System includes: DBS and Master Antenna Satellites

The majority of the rest are OTA. This means “over the air” only. These are folks who get their TV by rabbit ears or an antenna. Nielson estimates that about 5% of the US population has “Zero TV”, that is to say no Cable, Satellite or over the air antenna. Again, to clarify, “Zero TV” are folks who don't have Cable or Satellite or antenna. Many “Zero TV” types DO get TV through some other methods however. ⁴ What are those methods? 67% of the “Zero TV” crowd are actually using some other device: 37% are on computers, 16% are using the internet, 8% smart-phones and 6% via tablets.

While there is definitely a trend among some consumers to “cut the cord” as it were, the percentage of folks getting most of their video by traditional means remains exceptionally hi at 95%. Indeed the number of hours spent watching traditional TV in the most lucrative demographics (18-34) remains exceptionally high.

I was curious to see how those numbers break down in my small community of Pacifica California. Pacifica is on Coastside, just south of San Francisco. We have a well informed population but a difficult hilly terrain that may make some Satellite signals or internet delivery mechanisms hard to get. Our Cable provider, Comcast has recently completed a digital transformation of its service which should enhance everyone’s viewing experience. So here is what I found in my town:

12, 119 - Total number of Cable subscribers

13,967 – Total number of households (2010 U.S. Census figures)

Population breakdown

(32.6%) aged 45 to 64

(26.9%) population aged 25-44

 (20.7%) under the age of 18

(12.1%) aged 65 years or older

(7.6%) aged 18 to 24

So, in my town, roughly 86% of the local population gets Comcast Cable in 2014. To be sure the internet has meant a proliferation of alternative media and delivery methods. These methods will be a larger piece of our daily lives giving us the ability to consume media as we wait at the airport, the laundry mat or at the office. Based on these numbers however, it would be a bit premature to declare that new technologies have somehow rendered Cable TV irrelevant. Companies such as Sony, Google and Apple are trying to cash in on “on over-the-top” (OTT) delivery services that use the internet as the delivery means to the home. As Forbes magazine reports however, “distributors have contract clauses that discourage content providers from offering lower rates to Internet distributors or forbid the licensing of channels to them outright”. This means much of your most popular programming is simply unavailable via “internet only” options.⁷

In addition, as Forbes points out, in the future, data caps from providers could render OTT mute as a viable option. And while the Roku, Apple TV and other OTT video providers gain popularity the simple fact is most users are employing these services in addition to pay Cable. As Forbes puts it, “The number of cord cutters – those dropping cable in favor of streaming video – is still a very tiny fraction of pay TV subscribers.”

Let's face it. Some folks are dissatisfied with Cable and eagerly await the day they can “cut the cord”. The truth however, is that a viable option to the range of services cable provides just doesn't exist for the majority of TV viewers. That said, the advance of technology and consumer demand has meant more options than ever before. True it's more likely that your OTT provider is going to offer backyard wrestling before it offers the Superbowl but now you have many more options. What's more, these options mean an enhanced viewing experience. For example, integrating Youtube in your home viewing experience alone means you have access to a world of archived material from old Johnny Cash records to instructionals on how to fix your washing machine.

And Cable itself has become much more responsive to consumer demands. The “Comcast Anywhere” service for example now means you can watch live cable TV on your laptop, your pad or your cell phone. This means no more searching in vain for the President's live State of the Union address or your favorite football game when your spouse has you stuck at a pot-luck fundraiser instead of at home in front of your TV.

So rejoice TV fans. While Cable prices aren't going down this year, and while other options aren't exactly “prime time” the fact is we now have more options and more delivery methods available than ever. As technology advances, those options will merge, creating a more rich user experience that allows you to access what you want to watch pretty much anytime or anywhere. And no, your TV as you know it is not dead. Now if I can just find that five season “Breaking Bad” Marathon on my cell phone!

Martin Anaya is the Executive Director of Pacific Coast TV and the curator of the world’s first trans-media conference (The Digital Odyssey Conference) which for years has featured top industry speakers on the subjects of media convergence, diversification and emerging technologies educating media creators on alternate platforms and delivery mechanisms for their content. He has been featured on or contributed content to Fox, CW, Current TV, Transmedia SF, Flick Nation.net and others.

1 - http://www.itvt.com

2 - http://www.nielsen.com/us/en/press-room/2013.html

3 - http://www.tvb.org/media_comparisons/4729

4 - http://www.nielsen.com/us/en/newswire/2013/zero-tv-doesnt-mean-zero...

5 - http://www.cabletv.com/ca/pacifica

6- http://en.wikipedia.org/wiki/Pacifica,_California

7- http://www.forbes.com/sites/amadoudiallo/2013/10/14/cable-tv-price-...

[George_Salton]

Cable TV served us very well. but everything goes away. The development of the Internet sphere has given me much more now. I no longer need a sports channel - https://1xbet.ug/ I find broadcasts online and can also place bets from the comfort of my home. All you need is to have a proven sports portal. Do you have such an option?

[Martin Anaya]

Well, and more to the point, IPTV or Internet Protocol TV delivery has less than 3% of the marketplace. It's a far stretch to say it is taking over...not when you consider that it uses the same means of delivery (the cable lines) as TV and has a far inferior result in terms of programming and viewability. It is fine when wireless but, when tethered, most folks are going to opt for the superior technology, that being cable.

[Angie Woodward]

Nearly every medium sticks around after another type takes over first place. 8-track tapes are gone forever, but you can still buy vinyl. You can also get television over the air, and hard-wired telephone service remains available. I doubt cable will disappear.

[Martin Anaya]

Thanks Jared. Much appreciated! So are you a cable guy or have you cut the cord?

[Jared Michael Choate]

Wow! Lot of interesting points Martin!!