The Evolution of Cable TV: A Data-Driven Look at the Rise and Decline of Subscribers

A Brief History of Cable from Community Antennas to Content Behemoths

It‘s astonishing to think cable TV technology has been around since the late 1940s. Born not out of a desire to create an alternative television distribution system but simply to enhance poor over-the-air reception.

The initial community antenna or CATV systems, as they were known, originated in hilly or mountainous regions in rural parts of Arkansas and Pennsylvania. Homes nestled amongst high peaks with big aerials but no hope of capturing a descent signal.

So neighborhood enthusiasts took matters into their own hands. High poles and master antennas were assembled on the peaks to pull in distant big city station signals. Coaxial cable was then run house-to-house to distribute programming.

CATV remained a niche reception enhancement utility for underserved communities throughout the 1950s and 60s. But as wiring expanded into more metropolitan areas and channel selections grew, cable slowly transitioned into a revolutionary new national TV distribution platform.

Over the three decades spanning 1965 to 1995, cable subscriber numbers skyrocketed from under a million to over 60 million homes as the convenience and choice of multi-channel pay TV won over the masses.

The advent of satellite television in the mid 1990s provided renewed competition. But by this point cable had cemented itself as the dominant distribution technology. Having transformed from humble community antenna experiments into a ubiquitous living room centerpiece across America.

The Rise and Fall of Cable TV Subscribers in the 21st Century

Cable subscriptions continued to swell through the early 2000s. But a peak was imminent as over-the-top streaming platforms entered the frame…

Notes: Household penetration percentages based on total 120 million US households

After hitting a high of near 87% household penetration in 2010, broadband proliferation, economic factors and early streaming entrants triggered cable‘s slow yet steady decline.

By 2015, subscriber numbers dropped by over 45 million before recovering slightly. But the last half-decade has seen steeper losses return as the streaming revolution kicked into high gear.

2022 marked cable‘s worst year yet as over 4 million Americans cut the cord reducing market penetration to half of all households. And with streaming further embedding itself into viewer habits, cable stands little chance of rebounding.

Battle of the TV Titans: How Streaming Is Beating Cable

Much has changed since cable boasted nearly 100 million American subscribers just over a decade ago. Streaming entertainment has wel and truly gone mainstream.

But cable still commands decent market share on the back of loyal older viewers and live sports programming. So how exactly do cable and streaming now compare and compete?

Subscribers: Streaming Takes the Lead

As we‘ve seen, cable penetration now hovers around the 50% mark after peaking in 2010. Streaming on the other hand has grown rapidly from virtually nothing to over 75% of households in under 15 years.

Netflix and YouTube currently lead the streaming space. Amazon Prime and Hulu have also built strong followings. Collectively, over 300 million internet-based video subscriptions now exist in the US versus 65 million traditional cable customers. Sports-focussed platforms like ESPN+ have also seen solid growth, capturing younger audiences.

In pure subscription terms, streaming has not just caught up with but overtaken cable‘s peak numbers from last decade.

Viewership: Streaming Accounts for Nearly 70% of TV Time

In addition to leading in overall subscribers, streaming now dominates TV viewership. 68% of all US television consumption now happens via streaming platforms compared to just 28% through cable tuning.

Monthly viewership of top cable channels now sit under 5 million on average. In 2010 they were double that. Streaming services now account for 95% of all growth in TV viewers.

Amongst younger demographics the dominance is even more stark. Adults aged 18-29 use streaming for over 85% of total viewing. For kids TV, the breakdown is 92% streaming vs 8% cable.

This seismic viewership shift shows that streaming isn‘t just attracting subscriptions but is truly replacing cable as the first choice for TV content consumption across younger generations. Sports remains cable‘s viewership stronghold but even this is beginning to erode.

Content Libraries: Streaming Trumps Cable Diversity

The sheer breadth of programming available on demand gives streaming a major edge for most viewers. Taking into account catalog sizes across Netflix, Hulu, Prime Video and Disney+, over 1200 TV series and 5500 movies are available to stream on-demand. That‘s vastly more diverse content than even the most comprehensive cable packages can deliver.

Add to this the ability watch whatever you want whenever you want, and streaming provides a viewing flexibility cable has no answer for.

The one exception lies with live sports. Contracts like the NFL Sunday Ticket remain tightly tied to traditional linear TV and deliver content streaming can‘t always replicate. But with growth stagnant or declining across most non-sports programming, cable bundles seem less and less appealing or worthwhile for many viewers.

Price: Cable No Match for Streaming Value

For the vast majority of users, streaming simply provides far greater value. At $55 per month on average for mainstream services like Netflix, Hulu, Disney+ and Prime Video combined, streaming comes in hundreds of dollars cheaper than average annual cable bills.

Note: Cable costs include equipment, taxes and fees

Add to that far greater flexibility, with streaming allowing instant add/drop of services as desired, and it‘s easy to see why price-conscious viewers are cutting the cord.

Outside of avid sports fans and those on low-cost bundling deals, cable simply can‘t compete on affordability grounds for most consumers. And with younger groups especially facing cost pressures, cable stands little chance of winning them back based on pricing.

Not All Doom and Gloom: Who Still Subscribes to Cable and Why

While the long-term trajectory points downwards, cable maintains decent market share for now. This relative resilience comes thanks to a few key demographic and bundling quirks:

Sports Fans

Live event programming like NFL, NBA and MLB gives cable a lifeline. Cable viewership jumped during peak 2022 sports including the NFL season and FIFA World Cup as alternatives remain limited.

These seasonal spikes show that cable can still deliver unique, must-watch content. But as platforms like ESPN+ win more streaming rights, even the sports advantage will erode over time.

Older Americans

With 81% of over 65s still subscribing to cable, this group continues clinging to what they know best. But with fewer older consumers replenishing this market as younger generations favour streaming, relying on such an aging demographic paints a concerning picture.

The Bundling Bonus

Bundling cable TV with home Internet access remains a double-edged sword. Around 45% of current cable subscribers only maintain their package because they don‘t want to lose their bundled Internet access.

But with fiber and 5G broadband providing alternative high-speed options this forced loyalty will reduce over time. And as customers demand Internet-only bundles, cable‘s reliance on being packaged could backfire badly.

For now at least, these three groups are helping cable tread water. Yet retaining these loyalists requires major reform addressing affordability, flexibility and next-gen functionality.

Must-Try Harder: Most Viewers Want More for Their Money

When asked if they feel their cable subscription provides adequate overall value, over 60% of current subscribers répond no. It’s not hard to understand this dissatisfaction:

• Cost continues rising with average bills between $114-$217 per month
• Channel choice feels inadequate to justify the monthly spend
• Being locked into long contacts reduces flexibility
• Added fees for equipment and admin feels unfair

Compare this to the superior affordability, flexibility and breadth of content offered by streaming, and growing frustration around cable’s value proposition logical.

In fact 95% of streaming users report satisfaction with their subscriptions. Choosing only the platforms they actually want without being forced into expensive yet bland bundles clearly resonates.

Yet 45% of unhappy cable customers feel trapped by needing to maintain Internet access. Breaking the reliance on bundles by giving subscribers choice will be critical for cable companies wanting to regain favor.

Contrasting Fortunes: How Global Markets Are Shaping Up

It’s far from a uniformly dire outlook worldwide for cable…

China Powering On

Defying all fragmentation predictions, China’s state-controlled cable market added another 16 million subscribers last year. Restricted western streaming access helps protect incumbent platforms for now. But official efforts to censor online content may increasingly drive tech-savvy viewers to seek alternatives.

Latin America: The Next Cable Hotspot

Brazil and Mexico have seen their cable bases grow by nearly 50% this decade. Continued economic development and low streaming penetration help boost pay TV appeal across the continent.

Sky Rocketing in Europe

Satellite cable provider Sky added 4 million customers in Europe last year. Availability of premium soccer like England’s Premier League gives Sky strong appeal in football-mad countries like the UK and Italy.

Free-to-Air Biting Back Down Under

Cable penetration in Australian has plummeted from over 50% to under 30% in ten years. Viewers are shifting to mostly foreign-owned streaming platforms or reverting back to unlimited-access local free-to-air networks.

So while maturation and streaming are creating subscribers issues in the US, Canada and parts of Asia, other regions continue to present cable growth opportunities – for now at least.

The Future of Cable: Forecasting the Next Era of Pay TV

It seems inevitable cable will continue losing relevance in the US and other mature markets in coming years. But whether cable completely dies out or evolves into a next-generation “TV Everywhere” streaming model remains uncertain.

Here are the core factors that will determine if and how cable endures:

1. Sports streaming challengers
As more sports rights owners allow direct-to-consumer streaming options for marquee events, this will erode cable’s lock on exclusive live programming. Early movers like ESPN+ illustrate younger fans willingness to pay specifically for the sports they love rather than a whole cable bundle.

2. The bundling balance
The double-edged sword of packaging cable with home Internet access has helped cable tread water so far. But consumers demanding Internet-only bundles will force change. Existing providers will need break the forced reliance on bundles by offering standalone cable and Internet products to maintain subscriptions.

3. The living room land grab
As smart devices like Firestick, Apple TV and Chromecast replace clunky cable boxes, TV platforms will be apps rather than inputs. Without a dedicated spot on the home screen, cable risks losing discoverability. Competition from slicker streaming apps could slowly make cable feel like a legacy hassle.

4. Next-gen internet TV platforms
Rather than a coax input, next-generation pay TV “channels” may be apps streamed over fixed and mobile internet connections. Services like YouTubeTV, Hulu Live and DirectTV Stream show early promise. While not direct cable replacements, these internet-based multichannel products hint at enduring aspects of cable functionally moving forward.

The exact pace of innovation and consumer shifts make crystal ball gazing impossible. But the statistics paint cable’s unavoidable decline as newer generations shape their expectations and budgets around streaming freedom.

Yet core aspects of pay TV like niche channels, curated content, and tribal live viewing may endure through rebranded streaming equivalents. The cable distribution model is dying but not necessarily pay TV itself.

Just don’t expect today’s cable companies to look or operate much like they do now unless they rapidly and wholeheartedly embrace the implications of streaming’s irresistible rise.

Sources:

• Leichtman Research via Fierce Video
• Ofcom – Online Nation Report
• Ampere Analysis
• Nielsen State of Play Report
• CNBC
• Digital TV Research
• Omdia