Cable, DVD Industries Sag as Consumers Shift Attention To Online Media

Feb 9th, 2009 | By | Category: Digital Video Downloads, General, Internet TV, Streaming Video, Video

Todd Mundt, longtime public radio guy (and a favorite former Iowan) who writes as The Mediavore, is featured today in a CNN Money article about Americans’ changing media consumption habits.

Mundt’s changing media consumption habits are reflective of similar changes taking place throughout many U.S. households. Many families are economizing on entertainment costs, as they eliminate monthly cable and satellite subscriptions, and abandon renting and buying DVDs, in favor of free and low-cost alternatives.

As the article notes, Mundt canceled his cable TV, and scaled back on renting DVDs from Blockbuster. Now he gets his entertainment via cheap (or free) streaming video sites. Mundt keeps up on TV shows via, and streams rented movies via the less expensive Netflix.

Mundt estimates a monthly savings of $50 or more, getting his entertainment over the Internet connection he’d already have for computer Web access anyway.

Media Post predicts that “domestic pay TV growth is expected to slow to 5% in 2009 from 11% last year” and explains that the proliferation of free and on-demand content is a big factor in slowing pay-tv growth to a crawl. In fact, they argue, “the surge of free and on-demand content online … is devastating ad-supported broadcast television and … erod[ing] cable’s subscription business.”

Time Warner is making matters worse, and shooting themselves in the foot in the process, by proposing “metered bandwidth” charges for broadband customers. Consumers can, and are, cutting the cord to their cable and seeking a wider variety of content online. Time Warner has just reported a fourth-quarter loss of $16 billion, after a $24.2 billion writedown of assets which included its cable operations.

Media Post also points to the rapid adoption of streaming movie rentals (“more than 20% of Netflix’s 9.4 million subscribers (and 1 million Microsoft Xbox LIVE Gold members) …already signed onto its new streaming service even before the complete rollout of supporting multifunction devices from LG Electronics, Samsung, and TiVo.”) as a phenomenon that is changing the movie rental industry.

Even DVD sales, a former gold mine for studios to reap extra revenue from movie releases, stand to suffer as more consumers watch movies via streaming video sites. Digital Entertainment Group, reports a fourth-quarter decline in shipments of DVDs of 32 percent in the U.S. and Canada. The drop is the biggest since the industry-funded researcher started keeping track in 1997.

So who stands to benefit as consumption habits shift?

Certainly, the streaming video concerns like Netflix (for movies),,  and Hulu (for TV and older movie content) are doing a booming business. Behemoths Google (and its YouTube property) and Yahoo are experiencing greatly increased use. And computer industry giants Apple and Microsoft are raking in the bucks for their streaming video services.

Hardware manufacturers, like Roku, and Apple are looking to expand their customer base with their boxes that connect televisions to the Internet. Sales of Apple TV tripled in the last complete fiscal quarter, and Roku just recently announced the availability of Amazon content-on-demand through their set-top boxes.

Meanwhile, Google Inc.’s (GOOG) YouTube, and Yahoo Inc.’s (YHOO) video Web site have seen increased use as well, according to a January report by comScore.

Photo: Cornerstone Group.

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No Responses to “Cable, DVD Industries Sag as Consumers Shift Attention To Online Media”

  1. John Pemble says:

    About four years ago I “broke up” with cable TV. There was no on air reception availalbe where I lived in Webster county so I was only able to get video content via DVD or online streaming. Now in Des Moines I can pick up television with an antenna hooked up to my laptop. I’ve used it three times over the past three months. I don’t miss it. I enjoy programming available from television stations but I just need a small amount of it during a typical month. I find my programs from the iTunes music store (Battlestar Galactica), transfer it to my iPod and hook it up to my TV. That’s it. Also I’ve decided not to have Internet at home for now. This makes it necessary for me to get any television / video content downloaded if I wish to consume it at home. If anything it’s made me very selective about what I watch and when I watch it.

  2. corpus says:

    I’d drop the cable, but you have to have cable here to get high speed internet, so it’s a catch-22.

    We need more competition for high-speed Internet service!

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