Cable Companies Are Providing More Internet Than Cable Service

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The future does not look bright for cable companies. Consumers are moving towards online streaming in ever greater numbers, to the point that this constitutes a legitimate threat for the cable business model. Now we have two data points that confirm cable companies are providing more Internet than cable and TV ratings are slumping.

Leichtman Research Group announced in a press release that for the first time, top cable companies are providing more Internet services than cable services. In absolute numbers, the difference is only slight: 49,915,000 broadband subscribers versus 49,910,000 cable TV subscribers. However, this could be a significant tipping point.

Leichtman also noted in its release that broadband subscriptions increased 130 percent in Q2 of 2014 compared to Q2 of 2013. Consumers are very interested in faster Internet, possibly because they wish to have a smoother video streaming experience.

On top of the fact that more users are seeking out cable companies for broadband alone, TV has hit a ratings slump over the past few months. “Even with a World Cup bump, broadcast ratings were down 3.7 percent, and cable was down 6.8 percent in July” says Peter Kafka, senior editor of media for Recode.

There are many mitigating factors that could explain the slump, according to Kafka — fewer networks airing new shows, consumer DVR habits or maybe consumers just spent a large amount of time on Facebook.

But the elephant in the room is Netflix. According to Kafka, Netflix streamed 6.5 billion hours of video in the first three months of the year. He also quotes Rich Greenfield of BTIG research: Netflix subscribers watch 108 minutes of the service per day, up from 83 minutes at the same time last year.

Streaming services are edging out cable companies, and consumers are hastening the decline of cable by deciding on a cable-free package from their provider. Kafka notes that viewership and advertising revenue may pick up for cable channels in the fall, but it looks like the tide has changed for cable providers.

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