Please ensure Javascript is enabled for purposes of website accessibility

What Cord-Cutters Actually Want Is Cable in Disguise

By Danny Vena – Updated Apr 12, 2019 at 12:59PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A growing number of providers are finally giving consumers what they've wanted all along.

Cord-cutting is a growing phenomenon, and big cable has cause to be worried. The latest quarterly figures show that cable and satellite TV providers lost 1.1 million customers in the third quarter, more than double the 415,000 that vanished in the previous quarter.

Customers have long decried poor customer service and high prices as reasons for ditching cable. Then there was the adage "hundreds of channels, but nothing to watch." The dawn of streaming video several years ago accelerated the fall of cable, by offering consumers choices that simply didn't exist before.

A recent trend seems to show what customers really want: cable in disguise.

A cable cord about to be cut by a pair of scissors

Image source: Getty Images.

Premium channels

A recent announcement by streaming provider Roku (ROKU -3.77%) illustrates this growing phenomenon. The company revealed last week that beginning in late January, it would add premium channels to its existing lineup of more than 10,000 free (advertising-supported) movies and TV episodes. Consumers will have the option to buy subscriptions to cable channels like Showtime, Starz, and EPIX.

Roku is offering a number of options to encourage customers to add these top-tier channels. This includes the ability to browse all the available content for each provider before committing, free trials, single-click signups, and a single monthly bill from Roku for all the offerings. Roku also said that all its free, live, and premium content would be presented in a single channel, giving users an easy way to "browse, search, and watch a wide variety of entertainment without switching between multiple streaming channels."

Check out the latest Roku earnings call transcript.

A growing trend

Roku isn't the first provider to offer cord-cutters the option to add premium third-party cable channels to their favorite streaming service. In addition to being one of the top streaming providers, (AMZN -1.25%) gives its Prime members access to Amazon Channels, letting them sign up for a wide variety of popular cable favorites, including HBO, Showtime, and Starz, as well as a host of over-the-top streaming channels. At last count, those totaled 160 channels in the U.S. and more than 260 worldwide. The cost for these services is automatically charged to your default Amazon payment method. It's important to note that this service is only available to Prime subscribers.

DISH Network's (DISH -1.21%) Sling TV offers a so-called "skinny bundle," with plans starting at $25 per month. It gives consumers access to a package of 32 cable channels, including the Disney Channel, ESPN, CNN, HGTV, Cartoon Network, TBS, and TNT. Skinny bundles like this currently account for more than 11% of all cable subscriptions.

It appears that even Apple (NASDAQ: AAPL) has seen the writing on the wall. While it has yet to make an official announcement, the company is expected to debut a long-rumored streaming service later this year, offering a host of original movies and television shows, along with subscriptions to HBO, Showtime, and Starz.

A man in a shirt and tie handing over a stack of $100 bills

Image source: Getty Images.

What cord-cutters really wanted

One of the most requested options among cable subscribers has long been an a la carte menu: the ability to pick and choose among a variety of channels. Big cable could have significantly delayed the inevitable by giving customers what they really wanted, which was the option to self-select channels in smaller bundles at lower prices.

These recent developments suggest that what cord-cutters actually wanted all along was cable they could customize -- without the high prices. Now, they actually have a way of getting it.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Danny Vena owns shares of Amazon, Apple, LGF-A, Roku, Inc, and Walt Disney and has the following options: long January 2019 $85 calls on Walt Disney. The Motley Fool owns shares of and recommends Amazon, Apple, DISCK, LGF-A, LGF-B, and Walt Disney. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.