Earlier this year, I pointed out that the use of television antennas was on the rise, posing a threat to cable companies like Comcast (NASDAQ: CMCSA) and charter (NASDAQ:CHTR) already fighting a strong cord-cutting movement. While old-fashioned on-air broadcasts might not deal a fatal blow to the linear cable industry, they certainly could exacerbate the headaches of on-demand alternatives like netflix (NASDAQ:NFLX) and waltz disneyit is (NYSE: DIS) Hulu cause.
However, TV antennas can do more damage than I originally suggested, according to a recent survey by technology market research firm Parks Associates. Its survey, conducted during the third quarter of last year, determined that among US households with a broadband Internet connection – households able to connect to multiple free and low-cost video streaming sites – 25% of them also used aerial television. antenna. That’s up from just 15% a year earlier.
Now, don’t rush to an extreme assumption. Nearly 80% of those consumers still watch cable TV, and about 60% of those broadband subscribers stream video from a service like Hulu or Netflix; owning an antenna does not necessarily exclude the use of a second or third choice.
On the other hand, the antenna trend is telling – and troubling – for cable TV service providers when paired with another nuance of the poll.
Aerial broadcasts are high tech and highly supported
Over-the-air television has come a long way in the last few years alone. The new ATSC (Advanced Television Systems Committee) 3.0 standards – the new standard in the United States – require broadcasts in 4K ultra high definition as well as audio quality that one would only expect from an Internet stream. The 3.0 standard also includes provisions for 8K video, whenever the world is ready for that big leap.
It’s not just the underlying technology that has seen significant improvements. Perhaps seeing the slow collapse of the traditional cable TV industry, media and television technology giants are increasingly supporting free-to-air, localized broadcasts. sony (NYSE:SONY) owns the GetTV live channel, which reaches around 80% of US consumers, and has committed some of its best movie content to the platform, including franchises like Spider Man and men in black.
Dish Networkit is (NASDAQ: DISH) Streaming service SlingTV readily supports the use of AirTV over-the-air (OTA) devices for its streaming video subscribers, arguably as a way to remain part of the TV viewing ecosystem of consumers. It is important to note that the AirTV Player now supports recording and playback of Air TV shows.
TV antennas are normalizing again
Sony and SlingTV’s moves mirror what Parks Associates data says: the old-fashioned on-air is making a comeback, ultimately rooted in the one thing streaming companies struggle to do. In other words, to offer consumers information that is geographically relevant to them.
“Local news is important to most households – local broadcast channels are the most preferred types of channels, and news is the most preferred broadcast content,” said Steve Nason, director of research at Parks. Associates. He believes the COVID-19-related lockdowns have led to even higher antenna usage since the third quarter of last year before the outbreak took shape.
The eventual end of the pandemic won’t necessarily return these consumers to their pre-outbreak viewing habits, given a nugget of data that emerged from the survey. It turns out that although only about a quarter of broadband households actively use a television antenna, those who do tend to watch more television than the average broadband household. If teaching new users how to navigate the live choices and getting them comfortable with this type of programming is the big hurdle, the coronavirus pandemic could leave aerial broadcasters much better positioned than they were a while ago. barely three months old.
Another finding from the survey that should concern cable companies like Charter and Comcast: While about half of antenna owners are still customers of some sort of pay video service, the other half of antenna use 25 % of broadband households – about 12% of the total surveyed – do not subscribe to any type of pay-TV service. This includes live TV streaming options like SlingTV or Hulu Live, which could easily use the broadband connection they already pay for.
Granted, that’s still not a very big part of the consumer market. Deloitte estimates that the United States will end 2020 with 41 million regular broadcast antenna users, compared to a national population of approximately 330 million. Deloitte’s estimate of just 84 million pay-TV subscribers will mark a sixth straight year of decline, however, from more than 100 million cable subscribers in 2014. The opposing trends underscore the problem facing linear cable companies.
Join the dots
To their credit, cable giants Charter and Comcast seem to see the writing on the wall – the latter perhaps more so than the former. As fellow Fool Adam Levy pointed out earlier this year, for better or worse, Comcast has lost interest in chasing unprofitable cable TV subscribers. Broadband is the breadwinner that most cable companies now want to focus on, simply because it’s a customer relationship with many options for the provider, including selling Cable’s own streaming service. this provider to its high-speed Internet consumers. Aerial TV shows bypass the need for an internet connection altogether, leaving the likes of Charter and Comcast completely out of the loop.
We now know that these aerial TV shows are rapidly gaining traction. Whatever the cable industry is doing to avoid the impact of cord cutting, it might want to do more and faster.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.