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  • Professor Andrea M. Armani, University of Southern California
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  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

Jeff Kagan: Cable TV has been stretched to the limit: Is it going to snap?

Jeff Kagan: Cable TV has been stretched to the limit: Is it going to snap?

First of two parts

The traditional cable television industry is losing market share. Can this be corrected? If cable TV is going away, what will replace it?

In addition to cable TV market share dropping for companies like Xfinity, Spectrum, Altice and Cox, traditional telephone service from companies like AT&T , Verizon VZ , CenturyLink and others are also losing market share. So, let’s take a look at what is happening, why and what can be done about it and what is coming next.

As I give speeches and speak with industry insiders, customers, investors and executives, it is surprising that so many people are surprised to hear that cable TV has been losing market share for roughly two decades already. In fact, many smaller cable TV providers already have less than 10 percent market share. They are starting to exit the television space.

They are focusing on broadband and wireless going forward. And now broadband is under attack from wireless carriers using FWA to create wireless broadband.

Cable is no longer the primary service of Comcast Xfinity

Comcast Xfinity and in fact all cable television players are experiencing market share loss. Fortunately, Comcast is not just a cable TV provider. They also own NBC Universal and all their entertainment properties like television, movie studios, theme parks and more. This has helped insulate them from the growing problem others in the cable TV industry face more directly.

The industry has been getting into other services to slow the rate of loss using a sticky-bundle of services. This includes pay TV, broadband, wireless, VoIP telephone and more. But competition continues to pile on with more exciting, more innovative and less expensive technology like streaming services, wireless and wireless broadband competitors.

Over time, rather than rising to the challenge and getting better and more competitive, cable TV has been stuck in the rut of the same old and tired services sector. What they need to do is to find a new growth engine.

There are two ways companies can move forward. One, they can innovate and recreate and bring new products and services to market. That’s real growth. Two, they can acquire others in their shrinking industry. This makes them bigger and stronger during the short-term. However, they are not growing as the entire sector shrinks.

Cable customers are the key

As hard as the cable TV industry has worked in the past decade or two to both repair and improve the customer relationship, the long-term damage they caused to themselves over the decades have cast a shadow over the industry. Simply put, customers who were burned, do not trust just because you say, sorry.

That is why I believe Comcast created Xfinity, and Charter Communications created Spectrum. To let the customer think it’s a new company. A better company. A company they can trust.

Maybe that would have worked roughly 25 years ago when traditional cable TV reached its peak. It had grown over decades starting with roughly 15 – 25 channels for roughly $15 – $25 per month.

But the problem is that today we get hundreds of channels and pay hundreds of dollars every month. Cable TV keeps getting more expensive and that drives customers to look elsewhere. The average viewer watches a small handful of channels yet still pays these high fees. And every year cable TV prices increase and every year users are getting fed up having no power or control over their expenses.

Plus, cable TV companies make changes to their bundles and channels on a regular basis. They do this to raise prices and increase profits. This is something customers do not like.

Next week: What’s next for cable TV?

Read more: Why 5G broadband wireless performance works better for some than for others

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