The Emergence of Online Streaming and its impact on demand and supply of cable and internet services.
Introduction
Just like DVRs and VCRs, the emergence of online streaming caught the world by storm when they were first introduced. Since its introduction, online streaming, which is formally known as (streaming video on demand), has been uprooting many cable TV significant networks. Online streaming has resulted in internet movements such as the “cord cutters” who have abandoned cable TV and are solely dedicated to using SVOD. As technology continues to advance, and consumers’ preferences changes, the availability of online streaming continues to impact the market for cables and internet services. Therefore, while using demand and supply, this paper will address how the market for internet services and cable services have been affected.
The market for cable Services
In economics, five primary determinants of demand impact consumer’s decisions on whether to buy a product or not. These are the price of the goods or service, the income of buyers, the cost of relatable goods or services, the taste or preferences of consumers, and consumers’ expectations. With the emergence of online streaming, the demand for cable services has bee affected by the price of relatable goods and services. This causes the demand curve to shift to the left because companies like Netflix and Amazon are causes the demand for cables services to drop. The price of cable services will fall, and fewer cable services will be demanded at every cost. Consequently, the decrease in demand for cable services will cause a reduction in the equilibrium price and quantity of cable services.
There are at least seven determinants of supply that influence the supply of a product. These are product technology, prices of production factors, prices of other products, number of production units, government policies, taxes and subsidies, and expectations of producers. In this case, Product technology has influenced the supply of cable services. The introduction of online streaming has made it possible to view a variety of programs under one subscription, thus reducing the demand and supply of cable services. Since there will be less supply of cable service, the supply curve will shift to the left. The price of cable services will fall, and fewer cable services will be supplied at every cost. As a result, the decrease in the supply of cable services will cause an increase in the equilibrium price and a reduction in the equilibrium quantity of cable services.
The market for internet services
On the other hand, the demand for internet services has been affected by taste and preference because most people prefer streaming videos online through YouTube and Netflix than subscribing to television programs offered by cable services. This causes the demand curve to shift to the right. The price of internet services will rise, and more internet services will be demanded at every cost. Consequently, the increase in demand for internet services will cause an increase in the equilibrium price and quantity of internet services.
Since most people prefer internet services over cable services, the supply will be affected by the number of production units. Since more internet services are demanded, the quantity of internet supplies will increase. As a result, the supply curve will shift to the right. The price of internet services will rise, and more internet services will be supplied at every cost. As a result, the increase in the supply of internet services will cause a reduction in the equilibrium price and an increase in the equilibrium quantity of internet services.
Conclusion
In summation, “cod cutters” through the introduction of online streaming have severely affected the demand and supply of cable services in a negative way leading to a significant increase in the demand and supply of internet services.