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Cable is dying, is it worth saving?

| Monday, April 11, 2016

SavingCable_WEBLAUREN WELDON | The Observer

If you have a Netflix account, chances are that, starting next month, you’re going to be paying more to keep satisfying your media streaming addiction. Netflix announced an initial price increase back in 2014, but allowed old plans to be grandfathered in for two years before being switched over to the new price ($8.99, or one dollar more). That grandfathering period ends next month. In a move that was simultaneously savvy and sneaky, Netflix once again raised the price of their service (by another dollar) last October. That means that if you subscribed to Netflix before May of 2014, you are going to go from paying $7.99 per month to $9.99 per month.

Chances are that learning about the 25 percent price increase, or an extra $24 every year, didn’t upset you too much. Especially not when you compare that new monthly rate to the average price of a cable bill in 2015: $99.10. $100! Per Month! $100 can get you an Amazon Prime account for an entire year.

Perhaps even more surprising is the fact that the average cable bill has increased by 39 percent since 2010. That means that in spite of the rising popularity of streaming services and digital video recorders, cable companies are still looking to bolster profits. It’s hard to believe they can keep that up, especially when the number of subscribers has fallen every year this decade.

Cable companies argue that more channels help justify the cost, but most people only watch a small fraction of the channels that they pay for. In 2010, the average household watched 17.8 channels out of the 151 provided, and by 2013 those numbers had changed to 17.5 and 189, respectively. Cable companies are offering more channels even as audiences are watching less — clearly there is a growing gap between customers and providers.

Those providers also believe the quality of cable programming is worth the hefty price tag. As Amazon and Netflix produce increasing quantities of top-notch programming, though, it gets harder and harder to buy that excuse. Amazon’s “Transparent” and “Catastrophe” and Netflix’s “Master of None” and “BoJack Horseman” have all been heaped with critical praise, and those aren’t even the most popular shows available to stream. In other words, viewership doesn’t necessarily represent quality.

Even if it did, though, is it worth paying $100 every month for the honor of getting only 45 minutes of show for every hour you spend watching television? Is it worth paying $25 a month just to watch commercials? If you’re paying for cable, there’s a good chance that you are. A Nielsen study found that from 2009 to 2013, the amount of time per hour devoted to commercials on cable networks increased from an already frustrating 14 minutes and 27 seconds to an absurd 15 minutes and 38 seconds. There’s a reason that fewer and fewer young people are signing up for cable.

Only 46 percent of people age 18-36 have cable, as opposed to 63 percent of men and women 68 and older, and I would hazard a guess that that number is going to continue to shrink as millennials refuse to sign up once they have a place of their own.

Cable is dying, both literally and figuratively. For that same age group, 18-36, almost as many adults have Netflix (around 43 percent), whereas only 13 percent of people in the highest age group have the Los Gatos, California-based streaming service. Essentially, most of the people who have cable today have it because they have always had it. As kids who were raised with Netflix grow up, they are more likely to question what cable offers that streaming services don’t. That doubt will save them a lot of money — for now. It seems unlikely that cable can survive in the long term with their current pricing model. At some point in the future, one of two things is going to happen: Either cable is going to lower its prices to compete and the number of channels (and thus shows) will drop, hurting competition, or cable will go extinct and streaming services will become the new cable — the next media source de rigueur.

If, and I believe when, cable fades away, it will be interesting to see whether streaming services keep their competitive price points, or if they just take cable’s place on the throne of overpriced TV.

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About Matthew Macke

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  • notsofastnow

    I think your estimate of 25% commercial time for cable is on the low side. The average one-hour cable show now runs 42 minutes, and then you have to consider all those late night and weekend infomercial marathons, the station promos, the product placement, and the fact that a sporting event like football can play host to so many ads that game time is in the minority.

    After I cut the cord last year, I looked back and calculated that over 50% of what I had been paying for was advertising. I had given up live TV entirely in order to record all shows, including the Super Bowl, and fast forward through commercials.

    So if Netflix et al ever go the route of cable, I’ll simply stop cancel my subscriptions and look to free international streams for entertainment. By the way, I’m no millennial. I’m a crusty old baby boomer. My TV bill has gone from over $100 a month for a basic package (Bay Area prices and equipment rentals) to $22 a month, all of it commercial free and far better in quality than the garbage cable networks churn out.