It's certainly no secret that the rise of streaming video is working against the conventional cable television business. Roughly 1.2 million more U.S. consumers cut the cord in the fourth quarter of last year, with far more signing up for a new streaming service. Walt Disney's (DIS 0.16%) Disney+ alone picked up more than 20 million paying subscribers during the three-month stretch. Both are extensions of already-lengthy trends.
The cable-killing migration toward on-demand options, however, is now taking on a curious twist. It's no longer just the high-profile platforms like Netflix or Disney+ eating away at linear cable customers. The offbeat streaming brands with less splashy content are now drawing sizable crowds too, with content that's already available via traditional cable programming.
There's the rub. Consumers aren't going to pay twice for the same stuff forever. Their increasing comfort with building their own television entertainment bundles using several different streaming services means even more cord-cutting is in the cards.
Image source: Getty Images.
Accelerating growth among streaming services
On-demand documentary service CuriosityStream (CURI 11.65%) isn't everyone's proverbial cup of tea, but it's clearly appealing to some. The company announced on Tuesday it's now serving 15 million subscribers, up 50% from its headcount as of the end of 2019.
That report follows Discovery Communications' (DISCA) (DISCK) recent report indicating approximately 12 million people are now paying for Discovery+, en route to what UBS analyst John Hodulik believes will be 23 million paying customers by the end of this year. Not bad, given the company's slate of lower-budget, lifestyle-oriented programming like Gold Rush, No Demo Reno, and Monster Garage.
Then there are the more mainstream but less thrilling services like Comcast's (CMCSA 1.57%) Peacock. The brand's relatively slow start last year reflected its unusual nature, and likely, Comcast's uncertainty about marketing a product that comes in an ad-free and fully ad-supported format. Things are clicking now, though. Peacock boasts 35 million signups since the middle of last year, up from 33 million as of the end of 2020. Macquarie Research forecasts that figure will reach 52 million by 2024.
Rival ViacomCBS (PARA 13.40%) is aiming for about 70 million Paramount+ subscribers by 2024, more than doubling the company's current subscription-streaming headcount of 30 million.
Of course, many of these millions of subscribers still opt for top-tier services like Netflix or Disney+ too, the latter of which now has more than 100 million paying customers onboard. The company forecasts at least 230 million paying members within the next three years.
The end result? In its most recent analysis of the market, Ampere Analysis reports the average U.S. household pays for four streaming services, and paying for five or more isn't particularly unusual. Tivo pegs the current figure at 6.7 services in its fourth-quarter Video Trends report. CuriosityStream and Discovery+ make up a part of either figure.
At the tipping point
That's not just a lot of services, but a lot of different kinds of services. People are expanding their home-grown TV bundles too. Ampere believes some American households could eventually be paying for eight different streaming services in the foreseeable future.
It's an outlook that seemed outrageous back in August when Ampere first floated the idea. But given the speed at which niche providers like Discovery+ and CuriosityStream have added new customers over the course of just the past few months, that once-crazy outlook isn't quite so crazy after all.
Even crazier is that it's at least partially being done with programming already airing on cable television.
The real losers in this shift are of course the cable companies like Charter Communications (CHTR 2.04%) and the aforementioned Comcast, which own (respectively) Spectrum and Xfinity. Both lost more cable TV subscribers last quarter, participating in an increasingly problematic trend. According to eMarketer, the cable industry in the U.S. has seen its customer ranks whittled down from more than 100 million households as recently as 2014 to roughly 74 million now.
That's troubling, yet it's a trend that's yet to run its full course. eMarketer estimates there will only be 60.5 million paying cable customers in the U.S. by 2025.
Bottom line
This idea isn't exactly new to investors, or to cable companies. In January, Comcast CFO Michael Cavanagh reiterated a message he's delivered plenty of times before, explaining during the company's Q4 conference call, "We do not chase unprofitable video subscribers."
What is new is the sheer amount of traction the niche and generalized content streaming services are now gaining, with many of them successfully leveraging programming available through other means. Consumers aren't going to pay for the same thing twice indefinitely, and cable service is now the easiest relationship to sever.
