RIP To The TV Bundle
Consider the fact that every six seconds someone cuts their cable cord in the US. As you can see in the graph below the industry has been steadily losing households since 2013, and it appears there’s no end in sight to the decline. In this extensive article (maybe save it for the weekend?), Bloomberg takes a stab at explaining how the Cable industry got to this day of reckoning.
The basic problem with the TV bundle is it’s cost. Average cable households pay $108/mo for a subscription compared to $8/mo for Netflix. The reason cable subs cost so much is the carriage fees the more popular networks charge the cable operators, which get passed along to the consumer. ESPN has the highest carriage fee at $8/mo, which is charged to all subscribers whether they watch ESPN or not. The reason EPSN costs so much is because sports broadcast rights are way expensive. As the NFL, NBA, MLB, etc. keep raising their rights fees all the networks who carry sports have to charge more and more to retain this exclusive content. This has forced the cost of the TV bundle to skyrocket up 44% since just 2012.
The other issue is the available of quality TV programming via streaming at a fraction of the cost compared to the bundle. Netflix is the largest example, but there are also a myriad of other “skinny bundle” choices such as Sling, who give subscribers the flexibility to only purchase the networks they want at $20-40/mo. With all these new cost-efficient choices out there is it any wonder consumers are voting with their wallets to cut the cord?