It seems like the purveyors of pay TV are in
serious trouble.
The six largest publicly traded U.S. cable and satellite-TV providers combined to lose about 580,000 customers in the second quarter, the biggest such decline in history, according to company and Bloomberg data.
The economy is forcing the industry to face the reality of cord-cutting -- pay-TV customers canceling their subscriptions in favor of online options such as Netflix Inc. (NFLX) and Hulu LLC. While cable executives dismiss the idea that subscribers are switching to “over the top” Internet competitors, the reason isn’t as important as the decision to stop paying for TV, said Craig Moffett, an analyst at Sanford C. Bernstein in New York.
Personally, I loooooove TV. I couldn't live without Scifi Channel (even if they've killed off the Stargate franchise). I love BBC America. I've got a HGTV fetish. I adore True Blood. And then, of course, there's sports. There's a reason I started this. My DVR is like Christmas morning, and I'm always excited to see what's in the queue those moments when I can get away and watch TV (usually while I pedal away on my indoor bike trainer).
So I have DirecTV with all the sports packages and a bunch of bells and whistles. But more and more, I'm finding it hard to justify spending that money. And for me, it isn't the economy. I still have a job.
In fact, the only reason I still have DirecTV is because it is the only place to get the full season NFL package. I need to watch the Bears. The day the NFL gets wise and follows the other sports leagues by offering their games direct to consumers online, I'm cutting the cord. Cable/Satellite TV is also the only place to watch NBA playoff games (other than the finals).
For everything else, there's Hulu, Netflix, iTunes and plenty of services that provide more good content than I'll ever be able to watch, at a fraction of the cost of pay TV services that lard up packages with channels I'll never watch.
And while the sports leagues are living high on huge licensing deals with the likes of DirecTV, TNT, ESPN and Versus/NBC Sports, at some point it'll make sense for them to cut out the middleman and take their product directly to consumers. I pay around $250/year for my NFL package on DirecTV. As costs of internet distribution plummet, there's less and less reason for the NFL to hand some of that money over to DirecTV.
Then again, why even pay for this stuff? I have a slingbox, which allows me to transmit a TV signal in Chicago to any of my devices or TVs in Berkeley. So if I want to watch the Bears, I just mooch the signal off a friend's TV. When I was in Puerto Rico earlier this year, I caught all of the Bulls playoff games by streaming my TV back home, via Slingbox, to my iPad. As a bonus, my hockey-crazed brother got to see all the Blackhawk playoff games as well. Given that he lives in New Jersey at the moment, he can use my Slingbox to watch Chicago sports teams on his computer this year. No need for both of us to pay.
Total cost for a Slingbox is in the $200s, and it's a one-time cost (other than internet service). The catch? The signal definition isn't high def, and I've become a snob when it comes to video quality (my brother is less picky). But again, technology is quickly closing the gap.
The future is a la carte purchasing. The longer it takes for the pay TV providers to figure that out, the more they will bleed customers, and the more people will find alternate ways to watch what they want to watch.