With Netflix positioned to pass HBO in subscribers this year, is this the beginning of the end for cable?

Cable television is a staple in the American household. According to Nielsen, 90 percent of American households pay for TV.

Seems like a good sign for cable companies, right?

That would be the case if that number wasn’t expected to drop 4.7 percent by the end of 2013. This is up from the previous year, where only 3.74 percent of people decided to stop paying for TV subscriptions.

What is causing people to drop their cable companies?

Streaming.

A Serious Threat

Music streaming and downloading changed the music industry forever. Just count how many CD’s you’ve purchased in the last year. Did anyone think it would be such a threat to the industry?

Fast forward a few years later, and we may be headed the same way with the cable industry.

When streaming services, such as Netflix, began popping up, I don’t think many saw it as a threat to cable TV. Many used streaming as a service to supplement their TV subscriptions.

But times are slowly changing.

Netflix is believed to now have 30 million paying United States customers.

The significance? HBO, Time-Warner Cable’s popular premium network, has an estimated 28.7 million subscribers.

Netflix basically has the same subscription numbers as a premium television network, except with a much larger content library. Netflix gives subscribers the ability to watch what they want, when they want, something cable TV often struggles to do. Most importantly, Netflix doesn’t require a cable subscription.

Along with Netflix, Hulu has seen their subscriber numbers grow. Earlier this year, the company announced that their subscriber numbers had doubled from the previous year, standing at four million paid subscribers. Hulu offers over 70,000 full episodes of TV shows that are shown across various TV channels.

This is not even including services such as Amazon.com and iTunes offer. Both allow consumers to purchase television episodes, entire seasons, and movies, individually at any time.

With so many sources for TV shows and movies, the case for canceling cable service seems to be getting stronger.

So strong that a 2011 survey, conducted by Deloitte, discovered that 9 percent of respondents had recently canceled their service. Another 11 percent were considering canceling their service. Why? Respondent said that they knew they could find their favorite shows online. That’s potentially a 20% customer loss for TV providers.

Scary.

Cable’s Silver Lining

While Netflix, Hulu, and the rest offer an incredible amount of content, they still don’t offer everything.

These services still cannot cater to sports fans. Channels like ESPN, NBC Sports, and regional sports channels are not available, legally at least, through streaming services. For many, this is where going all in on streaming becomes a problem.

I know personally, I wouldn’t want to miss out on NBA, MLB, NHL, and NFL games.

Netflix has also been looking to integrate themselves with cable companies. The company would like consumers to be able to access the service through a cable provider’s set-top box.

So while streaming services are being looked at as the cable killer, Netflix is looking to coexist with its fellow media providers.

Can You Cut the Cord?

Seemingly, if you don’t watch sports, you can find whatever you want to watch via streaming. With so many popular television shows available, at less than $20 a month if you subscribe to Netflix and Hulu, it’s hard to justify paying $70 a month for channels you don’t need.

Cable isn’t doing itself any favors, with prices continuing to increase. According to CNN, the popular “triple play” bundles of various service providers has been increasing at a rate of over 6 percent every year.

If the price difference continues to be this significant, how long can people justify keeping cable?


Photo by SITS Girls