The results for 2014 are in, so today I am going to take a fresh look at the cable industry. The largest nine traditional cable companies lost just under 1.2 million cable customers in 2014, an improvement over the 1.7 million they lost in 2013. But looking at the bigger picture, the top thirteen cable companies lost only 125,000 customers for the year, which is slightly higher than 95,000 in 2013. Within those numbers, Direct TV and Dish Networks together added 20,000 subscribers for the year and Verizon and AT&T added just under 1.1 million cable customers for the year, down from 1.4 million from the prior year.

The industry as a whole is hanging solid and these thirteen companies have 95.2 million customers. Hidden in these numbers is the growth of cord cutters. For a number of years running, the cable industry as a whole has been slightly shrinking even though there is roughly one million new households entering the market each year.

Of course, the growth for the cable companies is in broadband. The largest cable companies in the group added 2.6 million high-speed data customers in 2014, while AT&T added 1,000 and Verizon 190,000. Time Warner Cable said in their annual report this year that their data product has a 97% margin, a number that opened a lot of eyes.

There are two other trends that are not captured in these numbers. First is the growth in time spent by people watching online programming like Netflix and Amazon Prime; and with that a corresponding decrease in time spent watching traditional cable TV programming. The overall hours spent per viewer for traditional cable dropped 4.4% for the year, but Nielsen reported that this was accelerating at the end of 2014. The most shocking number published this year came from Nielsen which reported that over 10 million millennials had largely fled linear TV just in the last year. Primetime viewing dropped by 12% during 2014 as more viewers are changing to time-shifted viewing.

The other trend is in the continued increase in rates. Most of the cable companies are reporting profits up 7–9%, due in part to more data customers, but also due to continued rate increases. As an example, Cablevision raised cable rates by 5.3% last year, or $7.86 and their average revenue per customer is now up to $155.20. It’s a bit mind boggling to think that’s the average and that there are a lot of households paying a lot more than that.

For yet another year the largest cable companies came in dead last in nationwide customer satisfaction surveys. This puts cable companies behind banks, airlines, and large chain stores and the satisfaction scoring for the cable companies dropped significantly just since 2013.

There is anxiety in cable boardrooms. Just in the last weeks there have been mixed signals from Wall Street when some industry analysts downgraded cable stocks due to the FCC’s net neutrality ruling, while others said there would be no significant impact from it. I tend to side with the second crowd since the FCC has excused broadband from rate (and most other kinds of hands-on) regulation.

But the real anxiety comes from a look at the demographics supporting the industry. The average age of cable viewers is increasing quickly as younger people eschew watching traditional TV. The average age of viewers for many shows and networks is now over 55, up sharply from even a decade ago. This is already starting to be felt in terms of advertising revenues, with the pre-sale for the current ad season down sharply from 2013.

There is also a lot of anxiety over Over-the-Top (OTT) programming on the web. It seems like there are weekly announcements of new alternatives coming online. The biggest recent shocks were when HBO, Disney, and ESPN said they would have some product on the web. These have been considered the bedrock channels of the cable company line-ups. Sling TV seems to be doing well with an abbreviated line-up (but which keeps growing). Sony is supposed to be unveiling what they are calling a major new online product later this year, and there are another dozen companies trying to put together web TV packages. The FCC is also looking at changing the rules that might make it easier for online content providers to obtain programming. The feeling is that 2015 is possibly going to be a sea change year and that we will start to see major shifts in the industry.

Meanwhile, programmers keep raising the rates they charge to cable companies, and the rate of programming increases is accelerating. Many programmers don’t seem overly concerned about the problems faced by the cable companies because many of them expect to have content included in online packages, and many are seeing explosive growth internationally in subscribers.

Liberty Media chairman John Malone chastised the industry recently for not implementing TV everywhere fast enough. That is the product that lets customers watch programming on any device on their own time. He says that this is probably the number one reason why Netflix and others have fared so well (which does sort of ignore the cost issue).

The larger cable companies are putting more effort into this area as witnessed by the new X1 settop boxes that Comcast is deploying. They have reported that there is significantly less churn from customers who have the newer technology. What can be said is that the industry is in turmoil. It may not look so bad when looking at customer numbers, but everybody in the industry senses that things are going to start changing quickly.

As an aside, I know somebody with the new X1 box and they tell me a different story than what Comcast is publicly saying. They recently moved and were given the new X1 box and they hate it. It regularly won’t record shows, or it goes offline and they can’t access regular programming or their recorded programming. They’ve asked repeatedly to get back their old style of box. They instead have been given numerous credits and one manager, as he was giving them a credit, admitted that Comcast had rolled out the new box too fast and there were problems with it everywhere. They have called several times to cancel but have instead been given another credit. When I told them what I was writing, they speculated that there is less churn because Comcast is just not letting people go. I don’t know how widespread the problems are with the new box, but cable companies have been known to withhold bad news from investors in the past.