When most Americans first signed up for cable, there was a lot of excitement. Networks could beam popular programming directly into the homes and lives of their subscribers. This was revolutionary in the 50s and 60s, and by the end of the 70s, over 16-million Americans were subscribing to some kind of cable network.
New technology meant new changes in entertainment, and the options just kept growing. With the explosion in the subscriber base, cable companies started to expand. At first, there were around 800 small cable companies in the US serving different areas. As transmission capabilities grew, the cable powerhouses started to emerge.
Most of us already know the next part of the story. Prices went up, consumer choices got smaller, and cable companies were charging more than a standard mortgage for their premium packages. Even with competing satellite services, subscribers saw very little change. This was when streaming services made their debut—changing the way that we looked at entertainment and starting the cord cutting movement.
Now, streaming services have become large enough and profitable enough to pose a long-term threat for major cable providers. We’ve all watched the mergers and acquisitions combining major networks and cable behemoths, and we’re seeing a new tactic emerge. Nearly every major cable provider has managed to insert themselves into the cord cutting industry in some way—sometimes undercutting popular service prices and driving the cost of content up.
Disney is pulling their content from Netflix to fuel their own streaming service. AT&T has merged with Time Warner, again, controlling certain content, and this is only the beginning. In order to keep their libraries current and to provide subscribers with access to popular shows, streaming services may have to pay more for access. This could translate into an increase in their costs—which we’ve already seen creeping up.
Cable companies have access to billions of dollars, and this means that they have more financial clout when it comes to content. They also have the capability to sell their own streaming services and skinny bundles at a fraction of the cost of standalone companies. Netflix has already made some industry alliances bundling with Comcast Xfinity, and Amazon Prime is supposed to show up on Comcast’s app lineup sometime this year. While this hardly proves a threat to cord cutting efforts, it tips the hand of big name networks who are trying to cushion their financial losses.
Following the entertainment trends of the last few centuries gives us some insight into the future direction—and it’s definitely time for a change. Cable companies simply charge too much for services that consumers can get cheaper somewhere else. It’s the basic law of supply and demand. People are demanding cheaper access to their favorite content, and streaming services are willing and able to supply it.
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