The Fuse is Lit for a Cable TV Implosion

The demise of cable TV has moved swiftly in recent years from its status as a lingering worry to an inevitability, and as 2024 wraps up, it looks all but imminent. With reports of subscriber losses quarter after quarter, year after year, it wasn't hard to envision a future in which the trend continued until subscriber numbers crashed to almost zero. Cable TV might live on as a legacy product, catering primarily to elderly users who have the money to pay for it and can't be bothered to learn something new, but about as relevant to the world as landline telephone service is to the communications industry.

But with recent moves by the big media companies, it's looking more and more like cable TV will be going out not with a collective whimper from its dwindling subscriber base, but with a bang as the medium itself implodes.

The major media companies' response to linear TV's accelerating decline has created a perilous situation that's not just limited to linear TV, it could prove calamitous for the entire media industry. With Wall Street and other financial analysts focused on the short-term impacts of the current crisis, the industry doesn't seem to realize the magnitude of the hidden risk here.

To understand why one industry challenge could lead to an even greater crisis, it's important to understand exactly how and why the course of events has deviated from what was long expected by industry observers.

The exodus from cable and satellite TV was long anticipated. While many industry leaders held out as long as they could, doubling-down on and trying to protect highly lucrative traditional pay-TV revenue streams, the industry was ultimately headed over over-the-top distribution as standard.

In response, ever major media company has rushed to build a streaming service. Netflix, it appeared, was eating their lunch, so it seemed simple enough to copy that approach. And while Netflix had long benefitted from licensing third party content, the media companies believed that a first-party approach could beat Netflix at its own game, depriving their main competitor of valuable content and monetizing it themselves.

This was the plan and the expectation: customers would take the same $10 a month they gladly offered up to Netflix, and give it straight to Disney, or Time Warner, or NBCUniversal, etc. Viewers would be cutting out the middle-man and opting for direct-to-consumer product over some of America's least popular corporations, the cable TV providers. Cord-cutting would be a problem for cable and satellite companies, but not for the media empires that created all the content.

What happened instead was what analyst Alan Wolk dubbed the "Flixcopalypse." Because Disney, Time Warner, NBCUniversal, CBS/Viacom, Apple, and more all launched new streaming products at once, consumers were suddenly asked to pay for half a dozen streaming services, which together added up to as much as a monthly cable bill.