A new report hit inboxes today that makes some bold claims about the future of cable TV. The Diffusion Group (TDG) estimates that by 2030, the “traditional” pay TV market — think cable and satellite TV — will have shrunk by 26%, leaving only 60% of households subscribing to traditional pay TV.
That’s undoubtedly a big drop from the 81% of households that get traditional pay TV today. But if analysts really think that cable and satellite will still make up two-thirds of the market for pay TV in 13 years’ time, they’ve got another thing coming.
The winds of change are blowing for the cable TV industry, and it’s all happening a lot faster than anyone thought. Over a million households ditched cable TV in the space of just three months earlier this year. That trend isn’t going to slow down: it’s going to accelerate massively.
Under a best-case scenario for existing cable and satellite providers, distribution is going to change to streaming services (like DirecTV Now), at the very least. The existing cable infrastructure is, in its own way, complicated and expensive. Cable companies have to reserve a portion of their cable bandwidth just for TV services. Cable boxes have to be distributed to homeowners, and technicians have to run a physical wire to everywhere you want to watch cable. It’s also inflexible: introducing new technologies like 4K, HDR, or new sound codecs requires a lot of work, and changes to industry standards.
Now, running a streaming service isn’t the easiest thing in the world — just look at the problems DirecTV Now faced at launch — but even right now, you can argue that it’s more economical for cable companies to have a streaming package, rather than maintain a cable infrastructure. If you can make that argument right now, there’s no way that an outdated system will survive as the most common way to watch TV in 13 years from now.
Want an analogy? Just look at what’s happening to voice. Wireless companies are moving away from the traditional cellular phone call technology to Voice over LTE, which offers better quality calls, and means that cell companies don’t have to spend money and resources propping up an outdated and inferior system.
So from a purely technological standpoint, cable TV as a way of consuming your pay TV package seems doomed. But pay TV bundles as a concept are also being challenged. The traditional model — which sees cable companies negotiating with the major rightsholders to offer customers one single package of channels — seems increasingly uncertain. The rise of Netflix and Amazon’s own original content has diminished the power of the cable company’s distribution, and major rightsholders like
The logical conclusion to all this is customers buying individual channels or content directly from the company that owns the rights, then using a set-top device (like
Predicting the future is hard; putting precise numbers on industry subscriptions in 2030 isn’t a job that I envy. But assuming that the current slow decline of cable will just continue is downright naive.