A growing number of American TV viewers are becoming less reliant on their cable or satellite TV service as online streaming services and Netflix continue to chip away at viewership.
"We are starting to see the beginning of cord cutting," Time Warner Cable CEO Glenn Britt said during a quarterly earnings discussion. "People will choose not to buy subscription video if they can get the same stuff for free."
Time Warner has lost 119,000 basic video subscribers during its fiscal fourth quarter, though it's not entirely as bad as it sounds. Sure, the number is high, but the cable business isn't going to suddenly fold overnight.
Rather, it's more likely people will cut back on the amount of movie channels they have through their content provider, and won't order as many pay-per-views as the economy continues to struggle.
The main problem I believe TV providers need to worry about is the influx of high-quality content streaming online as more Americans get broadband Internet. Sites such as Hulu.com offer many popular television shows and movies online on-demand at any time.
Furthermore, Netflix offers a reliable DVD rental service as well as a streaming content service to the PC and other internet connected devices such as the Roku box, Microsoft Xbox 360 game console and select Tivo models. Consumers also have the ability to watch recently released movies via Netflix DVD rentals.
"You've got these factors aligning at the right time," Forrester Research senior analyst Bobby Tulsiani told the Associated Press. "This time there is a real, viable alternative to cable."
On average, the monthly home cable bill was a whopping $84.59 percent in January 2008, which is up 21 percent compared to 2006 and 2007. As the economy struggles and people are cutting back, Netflix will send out two DVDs at a time and offer streaming video for just $15 per month -- and users can go online to watch good quality content.
Even though cable and satellite access won't die overnight, it'll be interesting to see if cable companies will be able to better compete against a sluggish economy, Netflix and the Internet.
