n the second quarter of 2010, six of the country's eight largest cable companies reported their worst subscriber losses ever. Industry experts have long speculated that cable television is the next "traditional media" doomed to a long, slow death in the wake of new technology. Here are four signs that they may be right:
Even the cable companies themselves are acknowledging that cable TV isn't a good value. "Young people are pretty smart," Verizon Communications CEO Ivan Seidenberg told a Goldman Sachs' media conference last week. "They're not going to pay for something they don't need...."
2. Big competition
Earlier this month, Apple announced that its revamped Apple TVs would be going for just $99 (older versions were $229) and started offering $.99 rentals on TV shows. Google TV, set for release this fall, will turn traditional TV sets into web browsers — and let viewers search for (and watch) the expanding range of television options available online. Netflix's streaming video service, Watch Instantly, is growing rapidly, and has reportedly inspired Amazon to jump in with a similar offering. "Netflix has already won the digital TV/Video War" says Paul Verna in Ad Age. A new Credit Suisse study found that 37 percent of Netflix subscribers between the ages of 25 and 34 watch Netflix streaming instead of TV, while 30 percent of subscribers between 18 and 24 have have ditched their cable TV.
3. Blockbuster's bankruptcy
The downfall of the movie-rental chain isn't a good omen for the cable industry. "Pay TV operators should heed the lessons that Blockbuster's downfall teaches," says Greg Sandoval at CNet. "Netflix competes with pay TV the same way" it did with Blockbuster.
4. Pessimistic city planning
New York City is already preparing for "life after cable," reports The Wall Street Journal. Though the city currently pockets $110 million annually from its cut of cable subscription revenue, a new deal guarantees the city renegotiating rights if that figure drops more than 22.5 percent over the next ten years "as consumers shift to Internet video." It's likely the sign of a wider trend. "Where do early adopters live in this country?" asks Eddie Borges, the communications director for the city's Department of Information Technology and Telecommunications, as quoted in the WSJ. "They live in New York.”
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