Only two decades ago, TVs across America were happily plugged in to their cable providers, promoting the latest brands, making us watch commercials—and making a huge profit in the process. Cable executives got very rich, with bloated egos and a lot of complacency.
Then, Netflix came. With Reed Hastings showing people all over the world a new way to watch TV. Suddenly, people had choices. They could choose their programming, pick from hundreds of movies, and even watch content that couldn’t be seen anywhere else. All without commercials.
At $8 a month, this struck the first death knell for the cable television legacy. For the first time, people had options that didn’t include paying inflated prices for “premium” channels. This may have rocked the executive boat a little, but cable giants like Comcast Xfinity were still secure in their positions at the top of the entertainment food chain.
It didn’t take long for lifelong cable subscribers to start jumping ship. As Netflix grew and new streaming services popped up, viewers learned to customize their entertainment options, and began the mass exodus that is cord cutting.
So, here we are. Older and much wiser now that we’ve learned to just say “no” to inflated cable packages with their hidden charges and “free” previews. But many still strive to isolate that one pivotal moment that led to the slow death of cable TV.
Was it Bob Iger at ESPN with the Trophy?
In an article written by Gerry Smith for Bloomberg, Disney CEO Robert Iger is named as one of the primary culprits. It’s no secret that TV executives regularly throw billions of dollars at the acquisition of sports rights—but Iger took it too far. He either drastically overestimated the market for televised sporting events or was their most dedicated fan…ever.
Iger still owes a whopping $45-billion in sports rights in the coming years. This wouldn’t seem quite as bad if the cost hadn’t been placed on the consumers. It added an additional $8 on to the cost of ESPN for cable providers, who happily tacked this on to their subscriber’s bills. Many people who could care less about sports were now paying additional money for access to ESPN.
It’s easy to understand why consumers weren’t happy. Prices continued to go up, commercials got longer, and the best content was on Netflix. The problem was clear, and the solution was to cut the cord.
Did Charlie Ergen Strike the Final Blow with His Satellite?
Cable executives fought long and hard to stop providers from creating skinny bundles that alienated big-money channels from consumer exposure. Letting subscribers pick and choose their channels wasn’t good business for pay-TV, and they argued that it would drive the cost of unpopular channels through the roof.
Then Charlie Ergen, the co-founder of Dish Network, introduced Sling TV—and the skinny bundle was born. The service allowed online subscribers to customize their channel lineup, giving them access to their favorite shows at around a quarter of the cost of their cable packages. Of course, people took advantage of this, and other companies began providing similar online options.
The skinny bundle killed the idea that cable subscribers needed to pay for channels that they weren’t watching and paved the way for online television.
Netflix Can’t Take All the Credit
It may have started with Netflix, but the outrageous cost of cable coupled with bad executive decisions kept it going. Now, cord cutting has become the Juggernaut of the entertainment industry—meaning that it won’t lose momentum anytime soon.
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