Is 2015 the Year Cord-Cutting Died?

By Markets Fool.com

While certain technologies lead to the demise of others, in most cases the new simply changes or diminishes the old without wiping it out altogether.

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Television, for example, may have supplanted radio as being the chief medium for news, sports, and entertainment, but the older medium continued to thrive long after it was no longer cutting edge.

The same thing has happened in varying degrees across all sorts of areas. People still send physical mail despite email existing and some folks -- perhaps more than you would think -- cling to landlines when wireless should meet all their needs. We also still have newspapers, CDs, and even, for some reason, vinyl records. That's why it seems likely that cord-cutting, people dropping cable for cheaper streaming options, probably won't result in the utter demise of the pay-television industry.

In fact, while more people did cut the cord in 2015 than in any previous year, the number remains small when put into context. This suggests that despite the media noise about the end of pay television as we know it, that may not happen, and cord-cutting could actually stall out and die.

A look at the numbers
Cord-cutting began in earnest in 2013 when cable providers dropped 100,000 customers and the trend grew slightly in 2014 with a loss of 150,000 customers across the 13 largest pay-TV providers in the United States, which account for about 95% of the market, according to Leichtman Research Group (LRG). The number more than doubled to 385,000 net video subscribers lost in 2015, which is still a tiny amount in a 94-million home universe.

In fact, in 2015, onlyAT&T posted a large loss -- 303,000 customers, according to LRG -- which it somewhat made up by adding 167,000 DirecTV customers. Industry leaderComcast only dropped 36,000 subscribers while No. 2 cable companyTime Warner Cable actually added 43,000 paying users.

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Those were major improvements for both Comcast and Time Warner Cable, which lost 194,000 and 401,000 subscribers in 2014, according to LRG.

"2015 marked the third consecutive year for pay-TV industry net losses, yet the total number of subscribers for major pay-TV providers (including DISH's Sling TV) has declined by less than one million since the industry peaked in 1Q 2012," said LRG PresidentBruce Leichtman.

Source: Leichtman Research Group

Is cord-cutting a thing?
Even if this pattern continues and subscriber losses double in 2016, that's still a relative trickle. It's also possible that the major pay-TV providers have found ways to reverse the trend. That is backed up by the fact that going into Q4, the industry was down about 650,000 customers for the year before cutting that almost in half in the last three months of the year.

Just because streaming options are cheaper does not mean that consumers are going to get rid of Comcast, AT&T, Time Warner Cable, and the rest. Spam is cheaper than filet mignon, but some people will pay for the top-tier product while others will split the difference and eat a hamburger. In this case, pay-TV may be able to serve those who want cheaper, but not cheapest, with skinny bundles and other clever packages of channels designed to prevent cord-cutting and even lure in some cord-nevers (people who were not subscribers in the first place).

It seems very possible that even though streaming has its charms, the vast network of choices offered by cable will keep most people subscribing. That does not mean cord-cutting has ended, but it's possible pay-TV companies won't be decimated by it. In fact, it's even possible that with skinny bundles, digital-only packages, and clever offers which bundle in broadband, that the industry could stop its losses or even post slight gains.

Some people will cut the cord because they don't watch enough TV to justify paying for cable. That, however, is likely to be a small number because cable may be expensive, but for some (families especially) it's actually a good value. The industry will struggle to extend that value proposition to more people, but it should be able to do that.

The article Is 2015 the Year Cord-Cutting Died? originally appeared on Fool.com.

Daniel Kline has no position in any stocks mentioned. He wants all the TV channels and streaming services he can get (and gets most of them). The Motley Fool has no position in any of the stocks mentioned. 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.