Cable continues to sucker us
Posted
May 27 2008, 02:40 PM
by
Kim Peterson
Rating:
The New York Times examines why we keep paying for cable, even though prices have risen 77% since 1996. Cable customers generally pay at least $60 a month, but only watch 13% of the channels available. Sounds like a rip off, doesn't it? But people accept the charges and continue to subscribe in growing numbers.
The key to cable's success has been bundling channels together instead of letting people pay just for the ones they watch, according to the Times. Cable companies say that unbundling those channels would give lots of cash to the most popular ones while the rest suffer.
You'd think our addiction to cable would make cable stocks a winning investment, but that hasn't been the case as the industry faces growing competition from telcos and the Internet. Comcast shares are down 20% from a year ago, and Cablevision shares have dropped 27%.
I just downgraded to Comcast's basic cable. I don't need anything more, with iTunes, Netflix and sites like Hulu.com. The only thing I really miss is cable news, but I can watch that online as well. But many people don't want to watch video on their computer screens, and they don't want to deal with connecting their computers to the TV.
Tech companies are addressing this problem by developing set-top boxes that bring Internet videos to the television. Everyone from Apple to Netflix to Hewlett-Packard has a box in the works. But that part's easy. The real challenge is getting Hollywood to distribute all the shows that normally go to cable. When that happens, the cable industry might see its subscriber trends reverse.
Related reading:
How Verizon became the next Comcast
Cable companies eyeing nationwide wireless network
AT&T goes after Comcast with digital TV service
DirecTV finally getting video on demand
Disney Channel goes free in Spain
