By now, we have all heard the phrase "cord cutting".
This is something that started around 14 or 15 years ago. The move was based upon the ability to find much of our entertainment online for less money than the cable companies service. Of course, these are now the same entities but we will get to that in a bit.
Over the last decade, a number of sources have popped up that have caused the cable broadcasters more pain. The rise of streaming means many are watching their favorite shows and films via the Internet. This is creating massive disruption among the traditional broadcasters.
In fact, if we look at cable television, there are three things keeping it alive:
The Boomers are cable people. They are at the age where the first wave of them are dying off. This means there will be less of them each year going forward. Gen X and Millennials are not as keen on traditional broadcasting.
Sports is still something that many turn to the traditional channels for. That is also changing as Amazon and Apple get into the game.
Finally, if the government ever decided that Big Pharma could not advertise on television, it would crush cable. More than 70% of their ad revenues is from this single industry.
That said, there is another cord cutting bonanza about to start and we are going to cover it.
As mentioned, people now get their internet from the same media companies as offer cable television services. Since we have seen consolidation, prices are going up. It is now to the point where many are paying for Internet what the cost of cable was when the cord cutting first began. This, of course, pales in comparison to the $200 or $250 bills some people get for television but it is still getting out of hand.
This is where we are about to see a shift.
Presently, much of this internet, in the United States, provided by the cable company or the phone company such as AT&T. These were the traditional providers which often created a duopoly in many areas.
This is changing. We are seeing 5G services rolling out on mobile phones which can be tethered to a laptop. The speeds on these, in some areas, is sufficient for many users. Even with the unlimited plans for data, this is still less than the cable company is charging.
Then we have Starlink and, soon, Amazon in the space race. While the former has the lead, Amazon is getting ready to launch their own satellite internet service. These are two other options that many will find available although the first target is rural areas. Nevertheless, they are entering the home internet market.
While it might seem like a lot of companies falling over each other, the reality is they are going to cut into the cable companies money. These entities are already losing subscribers, something that was consistent throughout 2023. For the year, the industry was down.
Where are these people going to head? For the moment, most are staying put. However, over the next 5 years, we can expect things to heat up. With a multitude of options, we can expect some aggressive competition for customers.
There are also likely to be some considerable deals to get people to switch considering the start up costs associated with entering new markets.
The 2020s are going to be known for its disruption. We already covered how a company like Disney (along with ESPN) is in a lot of trouble. Cable news channels are also going to have a difficult time going forward. Many industries are seeing the advent of AI (and soon robotics) entering as a disruptive force.
Major entities are going to find their way into bankruptcy due to their inability to adjust.
