As many Internet users know, more and more TV shows and movies are becoming available online and their video quality is steadily improving. In an economy where people are saving money wherever they can, online entertainment could become a serious competitor to costly satellite or cable TV.
"We are starting to see the beginning of cord cutting," said Glenn Britt, chief executive of Time Warner Cable Inc., the AP reports. "People will choose not to buy subscription video if they can get the same stuff for free."
Time Warner Cable, the country's second-largest cable operator, lost 119,000 basic video customers in their fourth quarter. There are no specific numbers available however on how many people actually gave up cable and how many moved to a different provider.
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Pay TV businesses may not be in trouble yet, but customers do have more options. For example, Netflix, an online DVD rental service, streams movies to its subscribers online and has even considered offering HBO original series. Hulu.com offers streaming video of TV shows and movies from NBC, Fox, and other networks and studios. Comcast, the nation's largest cable company, runs a similar site called Fancast. And YouTube, a video-sharing website, reached an agreement with MGM, Lions Gate Entertainment, and CBS in November 2008, allowing the companies to post full-length films and television shows.
So as people continue to pinch their pennies, some are choosing their broadband over their cable bill, which has reached an average of nearly $85. This is up 21 percent from 2006, according to the Federal Communications Commission.
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