Dear Cable TV Subscriber,
I don’t think I’ve ever told you how grateful I am. I haven’t paid a cent for cable television since 2009. Yet I have on-demand access via the Internet to a growing cornucopia of great shows like Game of Thrones, Homeland, Mad Men, and Breaking Bad, at reasonable à la carte prices. And it’s all because you continue to pay exorbitant and ever-increasing monthly fees for your premium cable bundle (around $80 per month, on average).
After all, your money goes straight to the studios and networks that produce and distribute all the expensive first-run programming that I’m perfectly happy to watch later at a discount. So in effect, you’re subsidizing my own footloose, freeloading, cord-cutting TV habits. I don’t know how to thank you!
Of course, it’s not like you volunteered to underwrite my TV viewing, or to pay so much to your cable provider. For well over a decade now, cable TV bills have been growing faster than inflation: they averaged just $40 per month per household in 2001, but grew to $78 per month by 2011 ($128 if you count bundled services such as Internet and telephone).
The main reason? The rising cost of all those great shows. Game of Thrones costs $6 million per episode. ESPN pays the NFL $1.9 billion a year for the rights to Monday Night Football. The networks pass those costs to the cable companies, and the cable companies pass them on to you.
The cable companies like to pretend that the networks have them, and therefore you, over a barrel; in 2011, Liberty Media CEO Greg Maffei famously decried ESPN’s rising fees as “a tax on every American household.” In reality, it’s all one big well-greased wheel. The cable companies are glad to pay for premium channels like ESPN and HBO—and all of the less popular content bundled with them—because they know you wouldn’t fork over nearly as much every month if you didn’t have to go to them for live sports and lush serial dramas.
Incidentally, I sure hope all the news lately about the devastating effects of repeated concussions on the brains of football players doesn’t end up taking the luster off the sport. After all, when most of you non-cord-cutters say you couldn’t do without live sports, you’re really talking about the gridiron—eight of the 10 most-watched shows on network and cable television in 2012 were football games. That makes the National Football League, which raked in more than $9 billion last year, the keystone of the entire TV economy. It would be such a shame if growing public awareness of the sport’s dangers diminished the NFL’s power to drive up the cost of your cable bill.
You know what makes me especially grateful? The fact that only a fraction of you have started using the streaming services that give me access to so much great video content. Netflix, by far the most successful Internet-based TV service, finished 2012 with only 27 million streaming subscribers in the U.S., compared to 99 million pay-TV subscribers across the leading cable and satellite TV providers. It’s true that the boom times are over for the cable companies: pay-TV viewing peaked in 2011, and some 200,000 to 600,000 of you are cutting the cord each quarter. But the bloodletting hasn’t yet reached the kind of volume that might force the big TV-industry players to rethink their business models, thank goodness.
The worst outcome for my wallet would be if more of you defected to platforms like Apple TV (which happens to be my own gateway to Netflix, movie rentals, and oodles of free programming from sources like Vevo, YouTube, and Vimeo, not to mention streaming music, podcasts, and radio). Or if lots of you plunked down $35 for Google’s remarkable little Chromecast device, which plugs into an HDMI port on users’ TVs and lets them call up content from Netflix, Hulu Plus, Google Play Movies, and the open Web from their tablets or smartphones. Or if you spent more time watching the galaxy of on-demand TV shows available through your Xbox game console. Don’t fall for the talk from Apple, Google, and Microsoft about the freedom and variety of on-demand video! They’re just trying to entice you away from the safe, warm embrace of your cable provider.
And whatever you do, don’t subscribe to Aereo, the startup that streams live TV to your computer, tablet, or smartphone using tiny antennae that suck in over-the-air broadcasts. The traditional broadcasters are trying to sue Aereo out of existence, because they know that if the startup actually succeeds, they’ll have a harder time hitting the cable companies with high retransmission fees—which add to your cable bills and help keep the whole industry afloat.
Let me also say how grateful I am that you put up with all the ads that come along with your cable programming. Personally, I’m allergic to commercials—I canceled my Hulu Plus subscription after two weeks because they were asking me to pay $8 a month and watch a bunch of ads, for Pete’s sake. But I realize that somebody has to watch all those ads, which generate about $80 billion in revenue every year for U.S. media companies. My friend Jeremy Toeman, the CEO of Dijit Media, scolded me the other day for my antisocial behavior. “If everybody did what you did, there would have to be a massive shift in the system,” he said. “The McDonalds and Coors and Fords of the world would say ‘No thank you.’”
In short, my cushy life as a TV free rider is only feasible because there lots of people like you who aren’t switching to Internet-only video. So please, keep on subsidizing my high-quality, low-cost couch surfing experience by paying your big cable bills for as long as you can. If you don’t want to do it for cord-cutters like me, then do it for the rising generation of cord-nevers—young people who could probably afford to have cable, but are too busy texting each other and playing Angry Birds to watch live TV. After all, the truly worrisome statistic for the cable industry isn’t that it’s losing hundreds of thousands of existing subscribers every year; it’s that only 250,000 of the 3.2 million new TV households that came into existence over the last three years bothered to sign up for cable in the first place.
The cord-nevers may not appreciate your sacrifice, but I will. Thank you.
Sincerely,
Wade
