All tied up

Online streaming is steaming but pay TV probably doesn’t need to worry—yet

June 4, 2013
Obsession
technology
June 4, 2013

So Amazon just wrote a large check to get some more of that online video-streaming action. And Yahoo thinks Hulu is worth $800 million. So obviously, Americans will abandon their cable TV subscriptions in droves, right? Um…

Just because online streaming is gaining ground doesn’t mean that pay television channels are about to become history. In fact, it’s probably going to take quite a while for that to happen, if you believe Craig Moffett. And you should: he’s been the top-ranked analyst covering pay TV—which includes cable, satellite and telecoms operators—for seven straight years. His latest missive, from his new, eponymous company, suggests that while the people are ditching TV for streaming, it’s not as bad as it looks.

According to the Leichtman Research Group, the 13 companies that control 94% of the pay TV market in the United States grew by 195,000 subscribers in the first quarter of this year. But that is nowhere close to the 445,000 in the same quarter of last year. Subscribers for the full year declined by 80,000. That makes it the first 12-month period in which the American pay TV market shrank,

But the rate at which pay TV subscribers are shrinking is pretty small. In the next seven years, some 2 million people will stop paying for television, reckons Moffett. That’s not very much compared to the roughly 100 million subscribers who pay for it now. Indeed, more people cancelled their internet plans than television subscriptions last year.

None of this is to take away from online streaming. But it looks increasingly like streaming is destined to be a supplement to rather than a replacement for television: Americans are watching more television than ever before, whether on their TVs or on the internet. “Cord-cutting,” as dropping cable is known, may be little more than a bogeyman after all.

Yet Moffett’s projections are only up to 2020. And as Amazon’s acquisition shows, the real change may come when the kids watching Dora on their tablets grow up and wonder what televisions are for.

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