Cable TV providers are raking in the dough. Even though thousands of Americans are refusing to shell out $40 a month for cable TV service, companies like Time Warner, Comcast, DirecTV, and Verizon are still able to generate billions of dollars.
Nielsen is an American global measurement and information company with headquarters in New York and Diemen, the Netherlands. They study consumers in 100 countries and provide a complete view of trends and habits of what consumers watch and buy.
Nielsen reported that cable TV providers received $12 billion on advertisements aired on TV dramas in 2013. In addition, these gigantic broadcasting companies collected $6 billion advertising dollars from news and sitcom programs. Cable TV providers transmit an average of 15 minutes, 38 seconds of commercials per hour.
In December 2014, Nielsen published the fact that 70 percent of the Twitter posts about cable TV reality shows took place three hours before and three hours after live airing of the program. How many tweets posted may not seem relevant to some people, but to cable TV providers, this type of information is instrumental in deciding what companies they will search out as potential commercial advertisers. In addition, advertising money is an essential component of what keeps cable TV providers in the black.
On average, in 2015, cable TV providers charge $41 for premium TV channels. However, by 2020, the price for these channels is expected to reach close to $85.
Bloomberg reports that cable TV providers, like Comcast, are able to squeeze more revenue from consumers to help maintain the growth of their company. Comcast's customers paid an average of $78.68 a month for video services.
Profits for cable TV providers are on a slow decline; however, they still manage to increase their earnings quite substantially. For example, a story published in Forbes details how cable TV provider Time Warner reported a drop in earnings in the 3rd quarter of 2014. Nonetheless, the high speed internet, phone, and cable TV provider still managed to accrue $5.7 billion.
Cable TV providers may have seen their revenues decline, though these small drops don't mean they will plummet in the future. Technology and demographics affect cable TV providers like Comcast, Time Warner, and more.
Technology has changed the television industry with over-the-top content delivery. People have unsubscribed from cable TV providers and started receiving streaming services from companies like Amazon Prime, Hulu, and Netflix, to name a few.
The Motley Fool reports how demographics have an effect on cable TV providers, as well. Americans are mainly comprised of three generations: baby boomers, Generation X, and Millennials. Baby boomers are generally reluctant to embrace changes in technology. However, the Generation X population tends to exert more of an effort to settle into new technology, whereas the Millennials cannot get enough of what the internet offers.
Statistics indicate that a mere 57 percent of people over the age of 65 have the internet at home, and the baby boomers that do have internet don't generally subscribe to content delivery services.
Additionally, statistics show that people over 65 spend considerably more time watching television than the younger generations. Cable TV subscriber statistics also show that older people in the U.S. are more likely to use traditional cable or satellite TV, as opposed to over-the-top content provided by companies like Netflix, Amazon Prime, and Hulu Plus, for example.
The cable TV industry could experience a dramatic change when there is a reduction in the baby boomer generation. As the industry changes, businesses like Time Warner, Comcast, Verizon, and DirecTV may eventually adjust their sources of revenue and stand to profit in the future. On the other hand, those companies that fail to adjust to technological and demographical change may end up losing out.
Moreover, if viewers eventually find their favorite shows online, cable TV providers are expected to experience a decline in their profits. In the meantime, the huge broadcast conglomerates continue to accumulate large earnings at the consumer's expense.
[Image courtesy of Yahoo]