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Jeff Kagan: Why Cable TV’s struggle is a self-fulfilling prophecy

By: Equities.com

December 16, 2024 at 14:48 PM EST

Why Cable TV struggle is self-fulfilling prophecy

We are increasingly seeing news stories about how cable TV companies are struggling. These warnings often focus on Comcast Xfinity, because they lead the industry. However, this trend is expanding and impacting all players. There are many reasons cable TV is struggling today. In fact, as an industry analyst and columnist, I have been warning about this growing problem for quite a long time.

There are in fact many lessons to be learned from the struggling cable TV industry. Let’s discuss a few of them and what the industry can do to turn things around … if it is not too late already.

To understand what is happening, we must first pull-the-camera-back to get a longer-term, historical view of the larger and changing telecommunications industry and the cable TV sector in particular.

One big mistake in creation of cable TV led to current troubles

First, let’s wrap our minds around the faulty way the cable TV industry was originally founded, and in fact still operates on today.

I believe this three-part-system is the original problem the industry has been wrestling with for decades.

While the industry was able to handle this strain for decades, new technology and new competition changed everything over the past decade or two.

The industry has been frantically trying to find a solution to this growing problem. Some companies acquired others in order to show growth, but none have fixed the original problem which continues to grow.

The first problem is cable TV is a three-part business, Second, corporate greed without care for the customer. Third is not caring about the user or their wallet. Forth is originally having little or no competition means they got lazy, falsely thinking they were invincible, and so much more.

I can continue, but you get the point.

Current cable TV problems started with this one factor

Originally, cable TV was simply set up wrong. It may have made sense at the time but hasn’t in quite a long time.

The cable TV industry started decades ago as a protected industry. That means no competitors. There was a different carrier in every geographic sector of the United States.

That was one serious part of the problem. That created a lack of concern for the customer. Something which eventually bit them in the behind.

Different cable TV companies were in operation, but they did not compete with each other.

This is quite possibly where all of today’s trouble began.

Cost of cable TV kept rising and created their own problems today

When cable TV started, it was affordable to the customer. It started out as an analog service, then eventually switched to digital.

There were of course service problems, but since the customer had no place else to go, they were stuck.

That’s why cable TV companies didn’t care much about customer complaints. Why should they? They didn’t risk losing business because of it.

That lack of concern for the customer is stuck in everyone’s gut ever since.

Cable TV ongoing price increases ultimately priced them out of market

Another problem is in the early days we paid $15, $20, $25 per month for a growing handful of channels. Since then, the number of channels kept increasing, as did the price customers were asked, or forced to pay.

Today, we pay hundreds of dollars per month for hundreds of channels, and there are other services as well like broadband, streaming, wireless and more.

Sure, we have more channels to watch, but the average user still only watches a tiny number of channels, yet they must pay for the entire bundle.

Most customers would prefer to pay less and get less since they don’t watch several hundred channels.

How cable TV created problem they are wrestling with today

However, cable TV executives didn’t care. They didn’t listen. That set the stage for the troubled waters they find themselves in today.

They stressed their customer and things kept getting worse as time passed. That move ultimately created a marketplace hungry for an alternative.

That’s when the Internet and broadband jumped in, and where streaming services were born.

That was when cable TV companies started losing market share and that hasn’t stopped in two decades.

Cable TV priced themselves out of the market, as streaming grows

So, the path the cable TV companies took actually created the need for cheaper alternatives.

That’s right. As the years passed, cable TV continued to price themselves out of the competitive game.

If they had only thought about the future. Thought about the customer and given them alternatives. The choice to pay less.

If they had thought about tomorrow and cared for the customers, they would have not painted themselves into a corner. They would have not created the need for many customers to escape.

However, their desire for growth caused them to blindly make moves which ultimately hurt their customers and that created the problem which is causing their struggle today.

This is part one of a two-part column.

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