As Consumers Continue to Cut the Cord, Will Cable Bundles Face Extinction?

Over-the-top streaming services are leading consumers to unbundle TV and internet services and select the options they want.

By Poornima Apte

Carime Boehr loves boxing. When the COVID-19 pandemic brought about lockdowns, she started subscribing to DAZN, an internet-based streaming service that airs live events, including many boxing matches. Boehr’s favorite thus far: a December 2020 match between Jelena Mrdjenovich and Paola Torres.

Five years ago, Boehr, a resident of Toronto, Ontario, was already subscribing to Netflix and added Amazon Prime to the buffet. Price considerations and bundling played a role in her decision to eliminate cable from her TV diet. “I remember having to buy channels in bundles and many were included in these bundles that I didn’t want or use,” she says. “Plus, I was watching Netflix the most anyway, so it seemed like the cable bill was the natural thing to cut.”

She pays $42.98 every month and expects she will cancel the DAZN subscription after the pandemic, which will bring her monthly total for streaming services to $22.98.

Saying No to Bundles

Traditionally, telecommunication giants like Comcast and Verizon have bundled cable and internet into one package. This forced consumers into an all-or-nothing situation, buying cable when all they really wanted was internet, or vice versa.

But the increase of internet-based streaming or over-the-top (OTT) services has flipped the script. Now consumers are in control, picking and choosing the kinds of services they want and from whom. Boehr, for instance, gets internet from her landlord so she only buys viewing content.

Boehr is but one example of consumers cutting the cord from traditional pay-TV through cable companies. But she is part of an accelerating trend: Over six million U.S. households were predicted to do so in 2020, and a total of 46.6 million households will have cut the cord by 2024, according to eMarketer. Thanks to OTT streaming launched by companies like Netflix, consumers can choose from a whole smorgasbord of viewing options without pay-TV. They can then rely on separate, cheaper, internet-only services like Starry for their Wi-Fi needs. Plans start at $30/month.

Netflix was among the early players to recognize that consumers were craving flexibility, explains Thomas Arnold, publisher of Media Play News, which covers the home entertainment industry. “From the beginning, consumers wanted something as cheap as possible and as easy as possible,” he says. Netflix’s initial mail-a-disc option, which it launched in 1999, upended traditional rental models: Consumers could watch movies without worrying about late fees or visiting a store. “That same principle now applies to streaming,” Arnold adds.

In other words: Flexible media consumption is the name of the game. The landscape is constantly changing. Case in point: In 2020, Verizon decided to unbundle its services and offer “Mix & Match,” allowing consumers to pay for internet and video packages separately.

The Enabling Technologies

Industry experts uniformly agree that Netflix ushered in the streaming revolution, which launched into high gear in 2007. Hulu joined the streaming game a year later. The expansion of residential broadband services, which allowed efficient streaming of movies into homes, was a primary motivator and Netflix saw it coming, Arnold says.

Streaming tech and servers fueled OTT services, explains Stephen Lovely, managing editor at CordCutting.com, which explores streaming media and educates consumers about their viewing options. “On the consumer side, the big innovation was the growth of streaming platforms like Roku and Fire TV. Sort of like Windows or Mac OS, these platforms give users a consistent experience on different devices,” Lovely says. “Broadband connections have been huge, too. That’s arguably the most important thing, actually—a lot of Americans have access to high-speed broadband, a least as compared to folks abroad. So that makes streaming a lot easier.”

“57 Channels (and Nothin’ On)”

Yes, streaming is a lot easier these days and has delivered a dizzying amount of choices to flexibility-craving consumers. Just like Boehr found a service that streamed boxing matches, there seems to be a panoply of options catering to various niches. Vet TV, for example, offers content targeted at military families. Then there are the giants like Amazon, Hulu, Disney Plus, Peacock, HBO Max, YouTube TV, among many others.

While consumers might be in the driver’s seat when it comes to their unique preferences, are there simply too many options in the name of flexibility? Streaming fatigue is definitely becoming a factor, Arnold says. “It used to be that you paid $10 per month for Netflix, now you’re spending close to $100,” he adds. The Springsteen song “57 Channels (and Nothin’ On)” is starting to ring true again.

It’s not just the viewing options that have increased, the ways in which we consume content have also multiplied. “We’re living in a multi-platform world. You can watch a movie in a theater, on a computer, on your TV,” Palmer points out. Wallpaper TV, where you turn on the television and watch whatever is playing won’t go away either, says Christof Haslauer, CEO and co-founder of NativeWaves, a service that enhances live streaming experiences for consumers. Delivered as an add-on service to broadcasters, NativeWaves offers more immersive experiences with enhanced camera views in real-time.

Tuned in to the Future

While technologies such as augmented and virtual realities have made a lot of headlines, Haslauer is unsure about their large-scale implementation to deliver more immersive experiences in the short term. He sees 5G, however, improving the streaming experience more quickly, especially on mobile devices.

Even as consumers move to streaming, Lovely doesn’t believe traditional cable bundles will go away any time soon. Arnold, on the other hand, sees traditional cable pay-TV as having a diminishing hold on the market. “It’s almost an antiquated model now especially, as the cable bundles of years past got so expensive,” he says, “They’re trying to keep things alive by offering many smaller, cheaper bundles and streaming services, but cable and pay-TV are slip-sliding away.”

Boehr’s example is a case in point: It will take a lot of convincing for her to go back to cable bundles, she says. “I suppose if they offered bundles where I could choose only channels I wanted to watch, I might have considered it,” Boehr says. “But, by now, I think cable’s time has come and gone.”

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