January 23, 2018 02:03 am CST
This is the end...
By Jason Stutman, Wealth Daily

Companies like Netflix, Amazon, and Google (YouTube included) have all spent the last half-decade chipping away at the foundation of cable.

It's been a long and arduous process, but when you take a look at the numbers, it's obvious the $100 billion oligopoly is finally starting to crumble.

For one, nearly 8 million American households have already cut the cord, including nearly half a million in the past quarter alone.

Further, 45% of Americans now stream television shows at least once a month, with eMarketer expecting that figure to hit 53% by 2018.

Perhaps the most concerning figures for the cable industry, though, come from younger demographics: 83.1% of new households are now choosing to live without cable, and 24% of TV viewers ages 18 to 34 (a prime advertising demographic) don't subscribe to any traditional television service at all.

Overall, ratings across national cable television networks fell 9% in 2014. For perspective, that's triple the decline seen in 2013 and more than quadruple the decline seen in 2012.

It's not just the threat of fewer viewers, either. Decreased viewing time is a threat as well:

monthly cable viewing time

It's no wonder Business Insider believes the cable industry is “starting to collapse.”

For customers, of course, this is all excellent news... The price of basic cable has increased 176% since 1995, and cable companies are among the most hated in the world. Comcast (NASDAQ: CMCSA) even beat out Monsanto, the government’s primary manufacturer of Agent Orange and DDT, in their respective primes.

Many customers have begun to realize they don't actually use the majority of their cable television services and are now seeking out their shows “a la carte.” They're starting to ask, “Why should I have to pay for over 300 channels when I only watch six?”

It's a great question, and it's tearing down the cable industry piece by piece.

Researchers believe that if cable subscribers were allowed to choose their stations one by one, or even in smaller groups, the telecom industry would lose $70 billion in revenue, or 50% of what they make every year.

The simple fact is that an a-la-carte model for television saves consumers money. No one wants to pay more than they have to, and the savings consumers are beginning to realize are hard to ignore.

a la carte cable

All Hail the King!

I'm sure you've all heard this a hundred times before, but ultimately when it comes to television, content truly is king. It doesn't take a rocket scientist to realize customers are going to migrate to where their favorite shows and programs are...

Now, cable has previously managed to survive by holding onto HBO and sports networks exclusively, but its grip on these entities is obviously crumbling.

Last month, viewers got their first taste of HBO Now, the over-the-top video streaming service that finally allows customers to access HBO on a standalone basis. The service costs just $15 a month, which ends up being a steal for many customers spending $80 or more just to get a few of their favorite shows.

The sad reality for cable providers is that they can't seem to nab breakthrough series anymore. Think of the most hyped up series recently: True Detective, Game of Thrones, House of Cards... all have been off-cable.

Even some of the most-watched cable networks like Comedy Central and AMC seem to be fading out of relevance.

Breaking Bad, for instance, was replaced with Better Call Saul, but no one is watching it. Mad Men is ending, so that entire audience is pretty much gone. As for the ever-so-popular comedy-news genre — Jon Stewart is leaving The Daily Show, The Colbert Report is over, and John Oliver is building a huge following on HBO.

With viewership on conventional cable waning and shows like Game of Thrones nabbing record audiences (up to 19.1 million weekly viewers), the threat to cable is immense.

Besides sports, HBO is the single most valuable entity on cable. In fact, The New York Post has recently suggested HBO alone is worth more than Fox’s $80 billion bid for all of Time Warner...

Further, networks like Showtime and ESPN are also already touting standalone streaming services. At the same time, Dish Network's (NASDAQ: DISH) new Sling TV streaming service is offering customers the most-watched cable networks (AMC, TNT, TBS, CNN, ESPN, Cartoon Network, A&E, History, etc.) starting at just $20 a month.

As is usually the case with any form of disruption, know that the fall of cable is, in fact, a moneymaking opportunity for any public investor out there. This should be apparent with Netflix's 16% rally today, alongside its epic climb to $550 over the last decade.

But I'm not just talking about betting on streaming providers here. There are several of ways to bet on the death of cable...

One strategy is to simply short major providers like Comcast (NASDAQ: CMCSA) and Time Warner (NYSE: TWX), but that could end up being quite the risk.

A much better option, I've found, is to buy shares of data-center real estate investment trusts (REITs), which you can learn more about here.

Most importantly, though, if you have any stock in Comcast or Time Warner, my personal recommendation is to get out while you can. Both companies have performed quite well over the last five years, but that rally is nearing an end.

Until next time,

  JS Sig

Jason Stutman

In addition to his work at Tech Investing Daily, Jason Stutman serves as the Managing Editor for multiple investment advisories including Technology and Opportunity and The Cutting Edge. Jason has also served as an editor and contributor for popular investment services Wealth Daily and Energy and Capital. Jason holds a B.A. in Behavioral Science alongside an M.Ed.,with postgrad coursework in mathematics, technology, and science.

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