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Cable Providers Must Cope With Rapidly Declining Subscriptions

The second quarter of this year saw the biggest decline in cable and satellite subscribers as over half a million people left to take advantage of new internet options. The new internet options are less expensive than traditional television services and they offer more customized viewing on multiple platforms. These benefits will likely continue to lure cable and satellite subscribers into the new generation of internet streaming services.

In a recent survey of 289 Netflix customers, Cut Cable Today found that 67% still have pay for traditional TV services, 9% plan to cancel their paid TV service, and 16% are considering get rid of cable and satellite within a year. Although they started as a complementary service to cable and satellite television, Netflix has revolutionized the industry and amassed 42.3 million subscribers in the U.S. alone. Between the cost savings, availability of popular movies and shows, and the original programming, Netflix has become a major player in the entertainment industry and lucrative investment for shareholders.

As providers such as Netflix, Amazon, Apple TV, HBO Go, and Hulu, continue to attract more customers, cable providers will likely respond by raising internet prices. Since about seven in 10 American households can only get broadband Internet service from one or two providers, usually cable and phone companies, people opine that the big telecom companies will still have plenty of leverage. This leverage will come in the form of higher internet costs that will eventually negate the cost savings currently offered by streaming services. To avoid this backlash, Congress and the Federal Communications Commission need to push for more choices to avoid monopolization of the broadband market.

Another course of action that Time Warner has undertaken is to give these streaming companies competition. As reported by the New York Times, HBO, and its streaming complementary service HBO Go, will exclusively offer the first run episodes of Sesame Street for the next 5 years. Viewers will be able to watch the episodes on PBS 9 months after their original air date on HBO. By targeting younger viewers, HBO hopes to give Netflix, et al a run for their money.

As streaming services continue to steal business from traditional cable and satellite television providers, the playing field will continue to change. Media companies will undoubtedly need to change with the times, but how they will proceed remains unseen.

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