During his January 7th CES keynote address, YouTube's chief business officer Robert Kyncl stood by the prediction he made four years ago that 90 percent of Internet traffic will be video by 2020 and that 75 percent of all video would be digital by then as well.
"This being Vegas, I'm doubling down and standing by my prediction," he said. "I think digital video will be the single biggest way people spend their day after sleep and work."
This trend has cast a shadow on the future of cable companies as they face an uncertain future in the new digital era. The old model of cable television has seemingly been broken for years as cable companies have struggled to stay relevant by unbundling traditional packages and turning to streaming options. The pay-TV industry lost subscribers for the first time ever back in 2013, and a record 600,000 cut the cord last year, according to a 2015 report by Nielsen.
Furthermore, according to a report by SNL Kagan, Comcast
Much of the projected drop in video subscriptions has been attributed to the shifting landscape of video consumption, and in particular the rise of the internet as the primary platform for video consumption. And while it remains to be seen whether Kyncl is correct or what will happen to cable companies, it is clear that they must figure out how to adapt to this changing world. While it is seemingly apparent that traditional cable television faces an steep uphill battle in the coming years, cable companies still have hope, in large part hinging on a promising outlook for broadband services.
According to SNL Kagan, the 10 year outlook for the U.S cable industry includes a positive trend for revenue growth on the back of broadband services, growth project to increase from $108.38 billion in 2016 to $117.7 billion in 2026, or $9.32 billion over the 10-year interval. Broadband subscriptions are forecast to swell by more than 8 million over the next 10 years, reaching 71 million, offsetting the decline in number of video subscriptions. Furthermore, despite a decline in net subscribers, net advertising revenue is expected to grow at a 4.3% compound annual growth rate through 2026 to reach $6.3 billion. "Like many industries, cable isn't immune to shifting preferences, but continued growth in broadband may propel revenue growth on both the residential and commercial end," stated Tony Lenoir and Ian Olgeirson, the SNL Kagan researchers behind the report. "Despite ongoing declines in video, the next 10 years look pretty good for this sector." The major broadband providers that look to capitalize on this trend include Comcast, Charter, AT&T
