#43 Goodbye Cable TV: the Netflix effect

How Netflix unbundled TV

In 2011, over 100 million US households or 85% of the total market had cable TV. People paid for Cable TV because it bundled hundreds of channels into one offering which suited all - from sports fans to kids. The emergence of Netflix changed the way we consume content and started the great unbundling of Cable TV.

Netflix's online streaming was a superior way of consuming shows - you could watch at any time, didn't get interrupted with ads, and didn't have to wait a week for the next episode. Traditional networks saw Netflix as a threat and decided to launch their own streaming platforms. NBC launched Peacock, CBC launched CBS All Access, Disney launched Disney+, ESPN+, & Hulu, Warner launched HBO Max, etc. But instead of making online streaming an extension of their CableTV experience, they made it a separate offering customers had to pay for. That was a mistake.

In order to drive users to their streaming platforms, networks made all of their TV shows available to stream online at any time. But on top of that, they created exclusive shows available online but not on TV. The only differentiator for Cable TV was live sports, which wasn’t available for online streaming. And so people who weren't interested in sports started turning off Cable and turn to streaming.

This resulted in a steep decline of Cable TV. It went from 85% penetration and 100 million homes in 2011 to 48% penetration and 62 million homes in 2022. In an effort to build up a new revenue stream, networks diminished the value of their main revenue driver in Cable TV and ended up hurting themselves in the process.

I learned this from Stratechery.