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Cable companies may have some very intricate ways of protecting their television business, but holding media companies to very strict partnership deals isn't going to retain subscribers forever. In addition to competition from telecoms and satellite providers, cable companies are dealing with consumers who don't want to pay their steep monthly TV bills.
But according to The New York Times, Americans are not giving up on their cable. That assessment doesn't account for the latest quarterly estimates. Or the large numbers of people who aren't cutting their cable so much as avoiding it entirely.
The New York Times documents a few examples of people who are disgruntled cable customers, or who tried to get rid of cable and came running back, like Bill Mitchell, a 40-year-old engineer in Winston-Salem, N.C:
"He cancelled his Time Warner cable service and connected his flat-panel television to the Internet to watch sitcoms and his other favorite shows, using products from Apple and Boxee.
"Recently, grudgingly, he returned to his $130-a-month cable subscription, partly because his family wanted programming that was not available online.
“'The problem is, we’re hooked on shows on HBO and Showtime, like ‘True Blood’ and ‘Dexter,’' he said, adding that he wishes he could buy only the shows he wants instead of big bundles of channels he doesn’t. “It’s so frustrating.”
And yet, The Times notes, cable customers aren't voting with their feet. They're continuing to pay exorbinant cable fees because they don't see a viable alternative. As The Times notes:
"In the battle for the living room, 2010 seems to be the year that the incumbent is strengthening its foothold."
But is that really the case? According to a New York Times/CBS News poll out this month, 88% of respondents said they pay for traditional TV service. And only 15% of those subscribers had considered replacing their subscriptions with Internet video options like Hulu and YouTube.
But the piece quickly skips past the younger generation of consumers who are not as easily appeased by cable companies, writing:
"Respondents under the age of 45 were significantly more likely than older ones to say they had considered replacing their pay TV service."
Many college kids and younger consumers who are accustomed to getting video for free are simply never becoming cable subscribers. They can't cut that cord, because they never signed on to use it to begin with. Furthermore, there's the fact that cable companies actually are losing current subscribers.
The New York Times cites Sanford C. Bernstein numbers, saying that the investment firm’s preliminary numbers for the second quarter show a slight drop in subscribers, but attributes that to this time of year, "which is traditionally weak."
Meanwhile, business intelligence company SNL Kagan notes that cable companies lost 711,000 subscribers in the second quarter of 2010 — the biggest quarterly loss in cable TV’s history.
Six out of eight cable TV operators also reported their worst subscriber losses ever last quarter. Cable companies are also competing with satellite and telephone companies for subscribers now — together those groups gained 495,000 subscribers.
That still means that about 216,000 people got rid of subscription TV services entirely.
Cable companies have been very strict about exclusivity with their partners — trying to maintain their role in the lives of their subscribers and keeping premium content off the internet.
But in the end, unhappy customers are easily lost customers. And keeping cable prices high and consumers paying through obligation is a marketing strategy that can't last forever.