New Study Says 40% Of American Households Will "Cut The Cord" By 2030

Cord cutting is a topic which we discuss on a fairly regular basis, particularly over the last several quarters as the subscriber losses for cable companies have seemingly accelerated (see: Cord-Cutting Accelerates, Sends Shock Wave Across Traditional TV).  Not surprisingly, one of the biggest losers of the cord cutting phenomenon has been ESPN, a media giant that ironically was one of the largest, if not the largest, beneficiaries of the cable TV bundle since it made its debut in 1979 (see: ESPN Lost 15,000 Subscribers A Day In October).

Of course, as TDG Research notes this morning, the wave of Americans electing to forego the massively overpriced cable TV bundle is only getting started and will see some 40% of American households ditch their service by 2030.

Generally, TDG expects that the penetration of live multi-channel pay-TV services will decline from 85% of US households in 2017 to 79% in 2030. While statistically a loss of only 7%, it nonetheless illustrates the ongoing secular decline of a once healthy market space. TDG predicts that, by 2030, roughly 30 million US households will live without an MVPD service of any kind, be it virtual or legacy.

 

During this time, legacy MVPDs will experience considerable subscriber losses, due not only to long-term industry trends but also growing competition from virtual pay-TV providers. Consequently, legacy pay-TV penetration will fall from 81% of US households in 2017 to 60% in 2030, down 26%. At the same time, virtual pay-TV penetration will grow from roughly 4% of US households to 14%, up 350% but from a very small base.

 

"TDG said early on that the future of TV was an app. Unfortunately, most incumbent MVPDs weren"t taking notes," notes Joel Espelien, TDG Senior Analyst. "The question is no longer if the future of TV is an app, but how quickly and economically incumbents can adapt to this truth and transition to an all-broadband app-based live multi-channel system."

As the Pew Research Center noted over the summer, while part of the cord cutting story is attributable to the growing availability of quality streaming content, another component is a simple demographic transition with only 30% of millennials aged 18-29 saying they subscribe to cable versus 61% with a streaming subscription.

About six-in-ten of those ages 18 to 29 (61%) say the primary way they watch television now is with streaming services on the internet, compared with 31% who say they mostly watch via a cable or satellite subscription and 5% who mainly watch with a digital antenna, according to a Pew Research Center survey conducted in August. Other age groups are less likely to use internet streaming services and are much more likely to cite cable TV as the primary way they watch television.

 

• Women are more likely than men to say their primary way of watching TV is via cable subscription (63% vs. 55%).

 

• Men are more likely than women to say their primary pathway is online streaming (31% vs. 25%).

 

• Those with a college education or more are more likely than those with less education to say their primary way to watch TV is online streaming. Roughly a third of college-educated Americans (35%) say they mainly watch via streaming, compared with 22% of those who have a high school diploma or less.

 

• Those in households earning less than $30,000 are more likely than others to say they rely on a digital antenna for TV viewing. Some 14% say this, compared with just 5% who live in households earning $75,000 or more.

Of course, many people wrongfully interpret the death of the cable TV bundle as a precursor the imminent demise of cable companies overall...but, as we pointed out in a post entitled "Streaming Killed The Cable Bundle: Record 941,000 Pay-TV Customers Ditch Cable In Q2," nothing could be further from the truth as the real losers will be the weaker content providers who won"t have enough of a draw to sell their content direct to consumers when the channel bundle goes away.  Meanwhile, the cable companies will make out just fine as they will still control the fastest internet connections into the home which will become even more valuable to data-hungry consumers.

We"ve long held the opinion that the content creation and media distribution businesses are on the precipice of a major transformation.  Since the birth of cable TV, content creators (think Disney, Discovery, Scripps, AMC, etc.) have been locked in a perpetual tug-of-war with distribution companies (Comcast, Charter, Verizon, AT&T, etc.).  Up until now, content creators have been the clear winners as they"ve continued to force cable companies to carry their growing lineup of channels, many of which are awful, by effectively holding their good content hostage until distributors agree to pay for channels that they (and their customers) likely don"t want.  As an example, a company like Scripps may refuse to sign a distribution agreement with Charter for HGTV or the Food Network, unless they also agree to pay for their less popular channels like TVN, Fine Living or the Asian Food Channel.

 

All of which is precisely why cable customers have ended up paying for 1,000 channels when they really only watch about 5 of them.

 

But, that is all changing with the onset of direct-to-customer streaming.  HBO was the first to blink, then came ShowTime and now Disney has just announced that ESPN will also go direct.  What this means, of course, is that increasingly people will be able to make a la carte purchases of the media they actually value and ditch all the "crap" that clever content creators have forced down our throats for years by holding their desired content hostage.

In summary, just like "Video killed the Radio Star," streaming has just killed the cable bundle.

Pay-TV Companies Tank As Subscriber Losses Surge To Record Highs In 2017

As the broader markets casually melt-up to new record highs with each passing day, one small corner of the equity market is in full on meltdown mode: cable and satellite pay-tv providers.  Down anywhere from 3-10% on the week, investors in this space seem to be finally admitting that record subscriber losses, quarter after quarter, just may end up being a bad thing.

As Bloomberg points out this morning, pay-tv subscriber losses are expected to set a new record in 2017, surpassing the 1.7mm homes that "cut the cord" in 2016, as industry analyst Craig Moffet warns "it is becoming increasingly clear that the wheels are falling off..."

Barring a major fourth-quarter comeback, 2017 is on course to be the worst year for conventional pay-TV subscriber losses in history, surpassing last year’s 1.7 million, according to Bloomberg Intelligence. That figure doesn’t include online services like DirecTV Now. Even including those digital plans, the five biggest TV providers are projected to have lost 469,000 customers in the third quarter.

AT&T sank 6.1 percent, the biggest one-day loss since November 2008. Dish, which also provides satellite service, declined 5.1 percent. Viacom dropped 2.5 percent while AMC Networks Inc. fell 6.8 percent after Guggenheim Securities LLC downgraded the two stocks to neutral from buy.

Dallas-based AT&T is pushing headlong into TV programming by acquiring HBO and CNN owner Time Warner Inc. in an $85.4 billion deal. Chief Executive Officer Randall Stephenson has argued that the acquisition will let AT&T create compelling video packages for mobile subscribers and provide valuable targeting information for advertisers.

“It is becoming increasingly clear that the wheels are falling off of satellite TV,” said Craig Moffett, an analyst at MoffettNathanson LLC, in a research note.

AT&T set off the selling panic earlier this week when they announced they would lose 390,000 pay-tv customers in 3Q 2017 alone.  As a reminder, AT&T purchased DirectTV for $48.5 billion just 3 years ago...something tells us shareholders might like a "do-over" on that colossal misallocation of capital.

AT&T, whose ownership of the DirecTV satellite service makes it the biggest U.S. pay-television provider, said late Wednesday it will report a third-quarter loss of 390,000 satellite and cable customers, echoing a similar warning weeks earlier from Comcast Corp. The same night, Viacom cautioned that its distribution deal with Charter Communications Inc., the second-biggest cable U.S. company, may lead to a blackout, potentially testing whether millions of viewers are willing to go without MTV and Nickelodeon.

Shares of both companies retreated Thursday, contributing to a broader selloff in the sector. The S&P 500 Media Index, which includes Comcast and ESPN owner Walt Disney Co., slid 2.3 percent to the lowest level since December.

Meanwhile, the bigger question that remains to be answered is whether cable providers will finally use this customer backlash to push back on content providers who have managed to force ridiculous annual price increases down the throats of American consumers for decades...Citi analyst Jason Bazinet seems to think so...

After decades of steadily increasing bills and ever-bigger packages of channels, the pay-TV ecosystem is in full-blown crisis mode. AT&T, Dish Network Inc. and others are offering cheaper, online-only versions of cable to lure customers back, but that means having to accept thinner profit margins.

“Those salad days of fat bundles, automatic carriage renewals and customary affiliate steps ups are long gone,” Citigroup Inc. analyst Jason Bazinet wrote in a note this week. “Today, every media and cable firm is jockeying for self-preservation. And we suspect the next chapter in this new era means Charter will drop -- or significantly curtail -- distribution of Viacom’s content.”

Of course, some of these content owners are making the decision to drop the cable bundle much easier all on their own...

Are We Witnessing the Death Spiral of Cable Television?

Via The Daily Bell

Cable television has long been the coveted propaganda arm used to program American sentiments. But because of the internet, viewer choice for news, sports, and entertainment has proliferated. Content is becoming decentralized, and that makes it harder to control the attitudes of the masses.

Since 2013, pay tv subscriptions have been declining, losing more customers than they gain. Over one million people per year are fleeing from paying for cable TV from companies like Verizon, Time Warner, and Comcast.

For three straight years, the viewership of the Emmy’s has declined. Yet while cable networks broadcast the award show, original Hulu and HBO shows were winning the awards.

You don’t need a cable subscription to watch shows on Netflix, HBO Now, or Hulu. While Netflix and Hulu run some cable shows, they also produce their own content. This doesn’t automatically mean the content won’t be akin to the typical propaganda on cable. But it does mean that control over programming is more decentralized. This includes the FCC’s slipping grip, as they have thus far failed to seriously regulate online programming.

Now consumers have a choice. Youtube offers even more choices which allow independent and much smaller content producers to disseminate their shows. Owned by Google, there is plenty to criticize when it comes to Youtube. They arbitrarily remove certain content that they don’t like. But this will just bolster alternatives like Vimeo and DailyMotion.

Amazon also offers subscription programming that goes along with their Prime program. Like Netflix, they are investing in making their own TV shows and movies to better compete with all the alternatives. An Amazon Prime 30-Day Free Trial lets you see what they got before committing.

And whatever issues you may have with companies like Youtube and Amazon, there are now plenty other options available, with more coming.

An exciting new startup called BadMirror.tv will soon go live. The company aims to tackle programming from a community perspective. They offer “hyperlocal broadcasting” that is boosted based on popularity but always starts locally. BadMirror.tvseeks to reconnect people to their community so that a handful of big executives–and whoever is influencing them–can’t centralize control over content, and decide what will be popular.

Pride comes before the fall.

A user base can vanish quickly when customers no longer get what they want from a business, and have plenty of alternatives.

And we should expect viewers to go elsewhere as their favorite content starts leaving a bad taste in their mouth. For years, football has enjoyed tremendous ratings, insulated from the decline of other cable programming. But viewers have recently been turned off by excessive political correctness from the NFL, as well as protest displays from pro-football players which many view as unpatriotic and disrespectful to law enforcement.

Overall viewership for the 2016 NFL season was down 8% per game, an average of 1.4 million fewer viewers per game compared to 2015. So far in the 2017 season just beginning, there has been a 14% decline in viewership.

The kicker is that football has been counted on by Cable networks to save television. Sports games are still better watched live since hearing the score for a recorded game is a major spoiler. When you watch live, it is harder to get around the commercials. But people aren’t watching football as much, not even on alternative providers. The NFL has overplayed its hand in delving into politics.

The good news is, as an individual, you don’t have to be affected by Cable TV one way or the other. You have the power to simply choose alternatives that don’t play into the machine of manipulation, fear, and drivel.

Of course, another great alternative is to read books for entertainment. Go full Farenheight 451, reject the screens which take up whole walls of the living room, and become a literary outlaw.

Chechnya’s Leader Claims “Russian Doomsday Device” Is Activated

Ramzan Kadyrov, the leader of Chechnya, gave a rare interview to a smaller media outlet in the United States that aired Tuesday, and what he said is taking many aback.

While speaking to HBO’s Real Sports, Kadyrov denied that gay people are humans, that they exist in his region, and that his government regularly detains or tortures them, despite ample reports to the contrary.  But that isn’t the news that’s riling up the masses, even though it is concerning that Kadyrov is more than likely committing human rights violations.  He also made a troubling comment about his country’s nuclear arsenal and a Russian doomsday device.

Kadyrov said, “America is not really a strong enough state for us to regard it as an enemy of Russia. We have a strong government and are a nuclear state. Even if our government was completely destroyed, our nuclear missiles would be automatically deployed. We will put the whole world on its knees and screw it from behind.” That comment certainly puts the left’s insistence on a war with Russia in perspective.  And Kadyrov is probably being more accurate than not in that statement.

According to The New York Times, Russia built a system in the 1980s that could do what Kadyrov described, known as the Perimeter System.  Bruce Blair, the former US nuclear officer who broke the story of the Perimeter System for The New York Times in 1993, told Business Insider that the system works when it detects nuclear explosions. Only a small crew, deep in a bunker, has a hand in the otherwise automated system, according to Blair.

Essentially, if another country conducted a nuclear attack that would destroy the government of Russia or anything a 1980s-era system would perceive as a nuclear attack, an automated system would empty Russia’s missile silos in an immediate counterattack.  Blaire’s concern is the automation of such a system. “One concern is that it’s highly automated, and cyber attacks, for example, or other phenomena, natural or man-made, could set it off,” Blair said. “It poses a risk of accidental nuclear attack by Russia.”

But there has yet to be an accidental nuclear attack and it’s been over 30 years since the system was first activated. But could the 1980’s technology pose a problem and cause an all out nuclear war? It’s hard to say, and experts are not sure either. “This was designed to retaliate massively against the US. What the specific targets are in this plan no one really knows, but it can be safely assumed it’s large-scale,” Blair said, adding that it would destroy most Americans and most large US cities.

This is troublesome to many Americans, considering the US president is supposed to sign off on any nuclear attack to prevent accidental strikes, and the left is continuing to push the former Soviet Union increasing tensions with Russia.  If Washington were incapacitated by a nuclear strike, it’s unclear whether it could respond at all. The US’s nuclear weapons are code-locked and absent the president and a backup in the Pentagon, the US may not be able to respond. Moscow code-locks its weapons as well, but this system would allow it to retaliate even after a nuclear decapitation.

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Author: Mac Slavo
Views: Read by 0 people
Date: July 20th, 2017
Website: www.SHTFplan.com

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