Tuesday, March 10, 2015

New Signs of Move Away From Cable

New signs of the move away from cable TV:

  • Verizon cut The Weather Channel from its lineup overnight. The Weather Channel is not just another channel, but the cable channel with the most viewers in the United States. Cutting it is like saying, “We’re not really a TV service anymore.” The Weather Channel is the most important channel for hotels, because it’s the one channel virtually every traveler wants to see. Without it, hotels won’t pay for cable. Verizon is basically conceding the hotel segment of its business. The Weather Channel is also often the last channel people still watch when time pressure forces them to cut back on television. Verizon will surely lose 1 percent of its subscribers as a result of this move. The TV business is losing that many subscribers every six months anyway, but this may be the beginning of a snowball effect, where subscriber loss leads to cuts in service, which leads to an accelerating subscriber loss. The cornerstone of cable deregulation was the idea that phone companies like Verizon would be able to compete effectively with cable networks. With Verizon faltering, that theory seems to have fallen by the wayside.
  • It is not just that Verizon cut The Weather Channel. The excuse it provided for doing so is even more concerning. To paraphrase, its press release says, “No one watches TV anymore. You can use our app to check on the weather.”
  • HBO is now available without a TV subscription. HBO was the original success story of premium cable. If it is cutting the cord, every other premium cable channel will follow.
  • A hit sitcom cut from cable, Community, relaunches next week on Yahoo. This week five million households are trying to work out how to plug in their new Internet set-top boxes so they can watch the new season on their TV screens.

Retirees aside, people are watching TV less and less. Summer, the traditional down season for TV, is coming soon. For the first time, the TV business may be looking at summer and asking, “How many of our viewers will come back in the fall?”