With the rise of over-the-top (OTT) content providers like Netflix, Hulu and Crackle, the concept of cord cutting has led many industry pundits to speculate that the cable industry as we know it will eventually cease to exist. But others have posited that cord cutting is just a concept. And the numbers seem to support that claim, as cable companies are still making a lot of money.
Recent research points out that cable subscribers have been declining for the past 10-odd years. But that trend doesn’t seem to be hurting cable companies where it counts most—their wallets—as those companies have diversified their portfolios, selling telephone services and Internet in addition to television.
In fact, since cable subscriptions peaked in the late 1990s, the industry has added 45 million high-speed Internet customers. Rather than viewing themselves as companies that simply offer television, cable companies have left their proverbial cocoons and metamorphosed into sellers of communications infrastructure. Because of this, though the industry is losing customers, cable companies are well positioned because they are getting their customers to buy multiple products.
When you break down the numbers, 40 percent of Comcast customers, buy three of the company’s products—phone, video and Internet—while 70 percent purchase two of those three products. In other words, when you talk about “cable companies” and think of them as companies that simply offer video services, you’re only getting half of the story.
Recently released earnings from both Comcast and Time Warner Cable reported in the article reveal that both companies get roughly half of their revenue from cable. Internet services are the next biggest earner, accounting for about one-quarter of all revenue. The rest is then divided between voice, ad revenue, business services and “other” revenue.
Due to the fact that it’s hard to enter the business of selling communications infrastructure—and because the demand for such services is perhaps higher than ever—one could expect cable providers won’t be going anywhere anytime soon.