Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Pay TV's Unsustainable Number: 17

Pay-TV providers should obviously be interested in their video subscriber numbers. That figure gauges how well a company is doing relative to its competition and whether it's growing its business or seeing it decline. But there's another number that should be important to pay providers as well -- how many channels their subscribers are actually watching.

According to a preliminary report by Nielsen, that number stands at just 17 right now.

189 channels, but nothing on
That's bad news for Time Warner Cable (NYSE: TWC  ) and Comcast (NASDAQ: CMCSA  ) , considering that pay-TV subscribers have an average of 189 channels.

The Nielsen chart below shows just how flat channel watching has been over the past few years relative to the increase in content options:

Source: Nielsen.

While video subscribers can't be expected to watch every channel they pay for, it should be a bit troubling for subscribers that they're paying for so many channels they don't watch. And providers should be worried that they're offering so much content users don't watch.

But this isn't news. We've all known that there's more than enough content on TV but not enough of what we want.

So why does it matter? Because users won't pay for unused content forever, and cable providers know it.

Fraying the cord
There's a lot of talk about cord cutting -- when users ditch traditional video providers for online content streaming -- but the shift is more like a slight fraying of the video cord right now.

In 2013, Time Warner Cable and Comcast lost a combined 1.1 million video subscribers, and the entire U.S. cable industry lost a total of 1.7 million video subscribers. But that number was almost completely offset by AT&T and Verizon gaining about 1.5 million total video subscribers the same year.

So while not everyone is ditching traditional television, cable TV providers are definitely taking it on the chin.

Foolish thoughts
The lack of increased channel watching despite the 46% uptick in content channels shows me that Time Warner and Comcast haven't quiet figured out how to retain customers in a changing video landscape -- at least not right now. That's bad news as the two companies move closer to a massive merger. Comcast is in the middle of purchasing Time Warner for $45 billion, pending regulatory approval.

While the potential merger could bring the best of both company customer retention strategies, it appears at this point it'll just bring all video subscriber losses under one roof. As customers opt for video streaming from Netflix or jump to AT&T and Verizon for their television needs, it's clear from the Nielsen numbers that simply adding more content isn't the answer. 

Cable isn't adapting, but you can benefit from its slow progress
Comcast and Time Warner have done little to embrace the sweeping video content changes ushered in by Internet. But investors don't have to ride out cable's demise. The Motley Fool's put together 3 stocks that are poised to benefit from television's evolution -- and they're not Netflix, Google, or Apple. Click here now to find out their names.


Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 07, 2014, at 7:57 PM, DocG1956 wrote:

    Google fiber was just laid down my street in KC. TW is loosing me because I have the same cable box for the last 10 years. The internet is pricy. I can only record one show while watching one. The entire area is running from TW and it isn't about how many shows are available. They have squeezed us for so long while leaving us with the same technology for over 10 years.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2947539, ~/Articles/ArticleHandler.aspx, 8/30/2015 2:05:29 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Chris Neiger

Chris has covered Tech and Telecom companies for The Motley Fool since 2012. Follow him on Twitter for the latest tech stock coverage.

Today's Market

updated 1 day ago Sponsored by:
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 1.21 0.06%
NASD 4,828.33 15.62 0.32%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/28/2015 4:00 PM
CMCSA $56.78 Up +0.01 +0.02%
Comcast Corp CAPS Rating: ***
TWC $187.43 Down -0.46 -0.24%
Time Warner Cable,… CAPS Rating: **