2015: The Year Cable TV Finally Dies

By Markets Fool.com

To date, cord-cutting -- or ditching cable -- has been more hype than substance. Although Internet-based streaming services have made living without cable a viable option, millions of American households continue to subscribe to traditional paid-TV services.

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But that could be about to change -- and quickly. 2015 is shaping up to be a key year for the industry: one that could represent the beginning of the end.

Major networks are going direct to consumers
Next month, HBO will launch HBO Now, the Internet-based alternative to its traditional premium cable network. For $15 per month, subscribers will get access to the HBO Now app, allowing them to stream all of HBO's content over the Internet, directly to their set-top boxes and mobile devices. For the first three months it will be exclusive to Apple's products, but will likely make its way to all major video game consoles, set-top boxes, and mobile devices in the summer.


Source: HBO.com

Others will follow. Broadcaster CBS owns HBO's traditional rival, Showtime. According to CBS CEO Les Moonves, Showtime will follow HBO's lead sometime this year, launching an Internet-based service of its own.

Starz seems likely to respond with something similar. The company has been experimenting with an over-the-top service in foreign markets, and its CEO has hinted that the company may eventually do the same in the United States.

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Other networks have yet to announce anything definitive, but if HBO and Showtime find success, they may be forced to follow suit.

HBO's parent company, Time Warner , has argued that HBO Now will not cannibalize traditional paid-TV subscribers -- that its purpose is to target households that have already cut the cord. But undoubtedly, there are paid-TV subscribers out there who keep their accounts active primarily for HBO or Showtime. If there are a lot of them, and if they cancel their service in favor of these Internet-based alternatives, other, more marginal cable networks would be pressured by declining affiliate fees and could be forced to adopt a similar model.

Internet-based cable alternatives
There's also an increasing array of Internet-based cable alternatives. Like traditional paid TV services, they offer a bundle of channels for one monthly fee, but unlike cable, they're delivered over the Internet.

Dish Network's SlingTV and PlayStation Vue are the only two currently available, but there could be as many as four by the end of the year. Verizon plans to roll out an Internet-based cable TV service in the second half of the year;Apple will offer something similar in the fall, according to The Wall Street Journal.

These services may not be particularly revolutionary -- subscribers are still paying for a bundle of channels -- but they represent a challenge to the traditional cable complex. SlingTV, for example, offers most of the major cable sports networks (ESPN, ESPN2, TNT and TBS) for a monthly fee that's far less than most cable packages (just $20 per month). Combined with a subscription to HBO Now or Hulu, it could present a better value to a paid TV subscriber, and entice them to cut the cord.

Streaming services are offering better content
Perhaps most significantly, native streaming services -- Netflix and Amazon Prime -- are beginning to ramp up their original content offerings.

Netflix has gone from offering one original series in the winter of 2013 (House of Cards) to a dozen, and has more than a dozen more slated to debut this year. Amazon has similarly ramped up its production: It now has nine original series and plans to offer at least seven more (two of which are slated to launch sometime this year).

Americans love TV, but only have so much time. Every hour a Netflix subscriber spends watching House of Cards is one they can't spend watching a program on traditional paid-TV. As Netflix and Amazon bolster their content offerings, more consumers may find that they offer enough value to replace a paid-TV subscription.

It's taken quite a while, but the cord-cutting future now appears imminent
Cord-cutting, as a popular notion, has been around since at least 2010. Yet, the cable complex has held surprisingly firm: nearly 100 million American households still subscribe to a traditional paid TV service.

But the move away from cable could accelerate quickly in the quarters to come. The services launching this year -- HBO Now, Sling TV, and PlayStation Vue, among others -- could finally bring about the end of cable TV.

The article 2015: The Year Cable TV Finally Dies originally appeared on Fool.com.

Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple, Netflix, and Verizon Communications. The Motley Fool owns shares of Amazon.com, Apple, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.