Illustration: Rebecca Zisser/Axios
Cable TV is dying a slow death, and after years of mostly denying that reality, America's major media companies are beginning to hedge their bets and prepare for what comes next.
By the numbers: 25 million homes have cut the cord since 2012, and another 25 million are expected to do so by 2025.
Looking ahead: If projections hold and the number of households with traditional pay-TV bundles stabilizes at ~50 million, U.S. media companies would lose ~$25 billion in subscription revenue, plus any advertising losses.
The big picture: Partly due to the loss of live sports, the COVID-19 pandemic will drive cable and satellite TV providers to lose the most subscribers ever, Axios' Sara Fischer reports.
The state of play: This has created a "tectonic shift" in the industry, with Disney, NBCUniversal, WarnerMedia and ViacomCBS all announcing major reorganizations in the last four months with an eye toward streaming.
- Cable TV customers pay ESPN more than $9 per month, so the company has long been hesitant to cannibalize that deal by pivoting to streaming. But as cable subscriber numbers plummet, they clearly see the writing on the wall.
- In the last two weeks, ESPN laid off 300 people — many of them in TV production — and moved most of its premium written content behind the ESPN+ paywall in an attempt to drive subscriptions.
A bold prediction: Every league will eventually go direct-to-consumer, sacrificing big paychecks from networks but gaining a direct relationship with their fans — and data about their customers.
- In that scenario, the ESPNs of the world might start acquiring stakes in sports leagues, rather than paying for the rights to broadcast them.
- For example, ESPN is paying billions of dollars to stream UFC fights on ESPN+ through 2025. What if they had just bought the UFC instead?
Between the lines: Not only is cable dying, but what it represents — linear broadcasts, studio shows, content designed to appeal to the masses — is also becoming a thing of the past.
- With so many on-demand options, and a customized feed of information on social media, why would a teenager tune into ESPN or FS1 outside of live games?
- And here's a really scary thought for legacy media: What happens if that teenager can't even be swayed to tune into the live games?
Because that's what's happening...