From luxury item to throwaway good: cable TV

Following up on Joel’s post from Wednesday, Figures from the last quarter suggest the cable TV industry continues to lose customers:

The phone companies kept adding subscribers in the second quarter, but Dish lost 135,000. DirecTV gained a small number, so combined, the U.S. satellite broadcasters lost subscribers in the quarter — a first for the industry…

Sanford Bernstein analyst Craig Moffett estimates that the subscription-TV industry, including the untallied cable companies, lost 380,000 subscribers in the quarter. That’s about one out of every 300 U.S. households, and more than twice the losses in the second quarter of last year. Ian Olgeirson at SNL Kagan puts the number even higher, at 425,000 to 450,000 lost subscribers.

The second quarter is always the year’s worst for cable and satellite companies, as students cancel service at the end of the spring semester. Last year, growth came back in the fourth quarter. But looking back over the past 12 months, the industry is still down, by Moffett’s estimate. That’s also a first.

The article goes on to mention a number of reasons for this: a bad economy so consumers are cutting back, younger people don’t see the necessity of cable, and there is a lot of content available through the Internet.

More interesting to me is the idea that cable TV is no longer the luxury good that it once was. Once the industry began in the 1970s and later consolidated, cable moved from being a rarity to being a necessity. As late as mid 2009, “11% of U.S. TV homes only have the capability to receive TV reception “over the air”.” Having cable simply became part of how Americans spend their disposable income. Cable became prism through which many Americans viewed the world. Certain channels arose, such as MTV which has been getting a lot of attention recently because of its 30th anniversary or ESPN which was the subject of an interesting book, and became part of the national consciousness. These channels, for better or worse, came to represent American culture and were exported around the world. I wonder if having cable at home signaled a middle-class lifestyle even if other traits don’t match this standing.

But now the world may have moved on. (At the same time, despite all the articles suggesting people stop paying for cable, bad economic times, and more competition, the drop in subscribers was only 0.2-0.3%.) How exactly will cable companies convince people that their product is a necessity, particularly among the younger generations? What will be the new narrative regarding cable that will push people to include this in their lives?

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