About a year ago, a dear friend of mine, who swore me to secrecy, went on a very entertaining rant over lunch about how the television broadcast business was on the verge of collapse, and all the major networks were thinking of calling it quits entirely, and migrating all their best content to pay cable and the internet. He painted a not-entirely-unappealing picture of a future where the only remaining broadcast TV stations would be the local outfits running news programs, syndicated reruns, and lots of infomercials 24/7. PBS might end up the last major network standing.
This vision of the television apocalypse doesn't take into account that cable subscriptions are also declining. A few weeks ago it was reported that cable subscription growth was negative for the first month ever. Media stocks have been losing value quickly as business prognosticators have been signaling further declines at the potential end of lucrative cable channel bundles. As cheaper online alternatives continue to grow, the long term expectation is that cord-cutting will increase. Some have speculated that it might get so bad that the only people left paying for cable will be the sports enthusiasts who can't get their favorite content any other way. In short, ESPN (and Disney) wins and everyone else loses.
Keep in mind, however, that there are still 100 million households with cable subscriptions in the US right now, and they're not all going to disappear overnight. Even though the broadcast networks are seeing declining ratings, there are still plenty of people watching "The Big Bang Theory" and "Empire." We're definitely going to see the business change, but it's not clear to what extent yet. So far the biggest changes have been in programming - a wider variety of shows, greater diversity, and an emphasis on quality, which has resulted in the current "Golden Age of Television." It hasn't been enough to retain viewers, so expect more drastic changes, including changes to the nature of the content delivery itself. Online and on-demand content has been rolled out by many networks, still seen by some as supplementary offerings, but they might end up becoming the main event. Advertising has steadily been increasing to make up for revenue losses - you may have noticed older reruns being sped-up or edited down to make room for extra commercials.
The biggest change looming is the inevitability of unbundling. Canada recently enacted legislation that will force cable providers to offer a la carte options next year. "Skinny bundles" containing fewer channels are being prepped in the US. Comcast is launching Xfinity Stream, targeted largely at Millennials, which will offer a selection of broadcast channels and HBO Now for $15 a month. It doesn't require their hated set top box or even a television - but it does require paying up for Comcast's notorious internet service. Speaking of HBO Now, Time Warner still refuses to provide subscription numbers, but it seems to be doing well. If other channels continue to spin off their own streaming services, that's effectively going to end up creating the a la carte option online. We shouldn't forget about Hulu either, which is now aggressively trying to following the Netflix model, snatching up their old Epix contract and introducing a new (mostly) ad-free tier.
So keep in mind that as we're watching the old business contract, we're watching a new one being built in its place. There are pros and cons here, mostly favoring viewers who have already cut the cord and consume most of their content online. Those who are still depending primarily on broadcast television - and it's not an insignificant number - will bear the brunt of the decline. With audiences and ad revenue shrinking every year, at some point the major broadcast networks will have to decrease operations significantly. Cable consumers will get more choices eventually, but the rollout will be slow as providers are still wary of online offerings cannibalizing the existing, more lucrative business. As for online viewers enjoying the benefits of ad-free on-demand services, don't get too comfortable. It's inevitable that we'll be seeing more ads once the pecking order gets hashed out. Remember back in the 80s when cable was supposed to be ad-free?
Television as we know it is probably on its way out, but television is going to be around in one form or another for a long, long time.