Cable Industry Still Proudly Thinks Cord Cutting Is A Media-Manufactured Crisis

from the denial-is-not-just-a-river-in-Egypt dept

Thu, Jul 23rd 2015 6:21am — Karl Bode

A few years ago, if you asked cable and broadcast executives if cord cutting was real, most of them would proudly declare that it was a complete and total phantom (like Yeti). The few that could admit to the trend would usually try to argue that the only people engaged in this kind of behavior were losers not worthy of their consideration when contemplating their business models. Of course data has emerged since suggesting that not only is cord cutting very real (albeit slow), the people doing it are affluent, educated, and right in cable's key future target demographic.

These days, most cable and broadcast executives, after slowly hemorrhaging basic cable subscribers for several years and watching broadcast TV ratings drop through the floor, will at least admit that cord cutting is real. But there's still a strong contingent among them that desperately wants to believe that cord cutting is a media-manufactured phenomenon and that their beautiful legacy cash cow will somehow live forever. The latest case in point comes via a Fortune article that explains "Why Cord Cutting Is a Myth" without actually doing anything of the sort:

"The way content is consumed is changing,” said Amy Banse, managing director of Comcast Ventures. “We’re all aware of that. But I personally believe, and also by looking at our own statistics, that the volume of press around cord cutting doesn’t quite match reality."

Again though, Banse doesn't offer any data to support the argument that cord cutting is a mass media hallucination. Factoring cable's failure to scale with new housing growth as the housing market recovered, telecom analyst Craig Moffett (who used to deny cord cutting) notes the pay TV business lost 1.4 million subscribers in the last year. The pay TV industry saw its first net subscriber loss during the first quarter of this year, and the industry is contracting at a 0.5% annual rate. This is before you factor in that many people aren't "cutting the cord" -- they're not signing up for traditional cable in the first place. And all of this is hitting cable and broadcast ratings hard. Comcast's recent earnings say the company lost 69,000 basic video subscribers last quarter and 3 million over the last six years.

These are measurable metrics -- some small, some not so small. All important, and none imagined.

Still, to hear the cable industry tell it, cord cutting is "over-reported":

"George Kliavkoff, president of Hearst Ventures, agreed, and said the topic is low-hanging fruit for the media: “Cord-cutting is a great ‘story,’” he said. “But I think it’s over-reported.” What’s more likely to gain sizable traction, he said, is cord “shaving,” where consumers simply move away from all-encompassing multichannel packages. “A la carte purchasing of channels—and not taking most of them—is a far more interesting area,” he said.

The second half of that argument could certainly be true. "Cord shaving" or "cord cheating" is also occurring at an increased rate as cable customers socked with bi-annual rate hikes look for any opportunity to cut their monthly bill. Eventually, these users will also likely be turning their gaze toward redundant cable voice services, forcing cable operators to replace that revenue in new and "creative" ways. This is all part of one conversation. And while yes, some media outlets do overhype cord cutting without nuance or context (as happens with all things), how the media explains what's happening is a distraction. The focus should be on how the cable and broadband industry is failing to adapt to internet video through its refusal to offer truly evolutionary products and pricing.

Some of this is semantics. Some cable execs simply don't like to call it "cord cutting," given there's still a cord -- it just happens to be broadband only. But whatever you call it, the answer to all of these problems has a single unified answer. With 2015's rise in new internet video options, cable's going to have to do the one thing it has spent a generation refusing to do: compete on price.

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Filed Under: broadband, cable, cord cutting, denial, tv
Companies: comcast

39 Comments

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milk em dry, 23 Jul 2015 @ 6:40am

" people doing it are affluent, educated, and right in cable's key future target demographic"

Other than those born into wealthy families, regular folks become well-off by being smart and thrifty. Why be bilked for some services that are not basic necessities, like food and water? Unless you're those who value entertainment over life itself. Those people do exist though.
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Anonymous Coward, 23 Jul 2015 @ 6:42am

Yes, because who wants to actually be able to choose what they watch and when they watch it?

I mean, it's not like VCRs, dvds or dvrs were ever popular. Oh wait
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Anonymous Coward, 23 Jul 2015 @ 6:43am

I'll tell you why...
Again though, Banse doesn't offer any data to support the argument that cord cutting is a mass media hallucination.

Because he uses subscriber info, not usage info. Internet by itself is so prohibitively expensive (thanks, Cable Cartels!) that a lot of people will sign up for internet + TV, but will only use the internet part. He doesn't care about that second part (they only use internet) - he's only looking at the first bit (they signed up for internet + TV).
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John Fenderson (profile), 23 Jul 2015 @ 6:48am

Re: I'll tell you why...
This is me. My total Comcast bill is lower with internet+basic cable than with internet alone, so I get basic cable. But I haven't even hooked the converter box up. I'm a "cord cutter" in that I don't watch cable TV, but I'm not a "cord cutter" in their statistics.
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Anonymous Coward, 23 Jul 2015 @ 7:09am

It used to be funny, now it's just sad.
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Frankz (profile), 23 Jul 2015 @ 7:10am

One other reason they can't, or won't, admit that it's true, is that would then give it more public attention and "advertise" the fact, which would then gain even more cord cutters. In other words, it might snowball. And they know it.
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Roger Strong (profile), 23 Jul 2015 @ 7:16am

It's not about convincing you or I that cable-cutting is a myth. It's about convincing their investors. Many of whom are older folks who are only now starting to accept that pay-tv is the future.
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andy, 23 Jul 2015 @ 7:23am

!!!!
It will be interesting when people realise that Hollywood is also collapsing as they increase pricing and make bigger profits but lose customers.

The next 10 years or even 5 is going to see big changes in the content industry, hopefully in favour of the consumer.
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jupiterkansas (profile), 23 Jul 2015 @ 7:24am

Re:
It's snowballing anyway.
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Anonymous Coward, 23 Jul 2015 @ 7:28am

How much do you want to bet that Obama and the Democrats will try to pass a bill that requires Americans to purchase cable TV service under the guise of the Interstate Commerce Act. Like what they did with Obamacare and that the president is planning on adding even more mandated purchases for people living in the country.
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Anonymous Coward, 23 Jul 2015 @ 7:45am

Re:
$250
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Anonymous Coward, 23 Jul 2015 @ 8:40am

Re:
Nice non-sequitur slippery-slope you have there.
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Roger Strong (profile), 23 Jul 2015 @ 8:42am

Re:
Because like with healthcare, everyone will eventually require cable.

And many Americans are being bankrupted because they can't afford cable.

And when they require emergency cable and can't afford it, the rest of us end up paying for it.

And because cable is the same sort of life-or-death issue as healthcare.

Actually, I can easily see cable and broadcast executives making exactly these arguments. And the Cruz/Palin/Santorum "Hee Haw meets 28 Days Later" crowd believing them too.
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Erik, 23 Jul 2015 @ 8:47am

Cord cutting is certainly happening but some of the millennial cordnever numbers are due to the fact that something like 30% of millennials live at home with their parents and watch TV (who are paying for cable).

FWIW, an MVPD with an addressable digital set top box has way better consumption numbers than Nielsen or any of the publicly available TV rating services. They are not doing some idiotic audio watermark read of a sample. They know exactly what set top box IP addresses are watching exactly what programming at a second by second resolution.
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Andrew (profile), 23 Jul 2015 @ 8:47am

I've had no TV service since 2004, except for a 3 month period in 2006 (issues with Charter). That might not sound that notable except for one thing - my wife's worked for DirecTV since November, and as part of her compensation, we're eligable for a Genie system and programming, free. We don't have it.

In fact, until christmas, all our TV sets were in the 14-19" range and from the late 90s, mainly used to play the Wii with, or my DVD player (haven't had that hooked up in over a year, haven't bought a DVD in 6-7 years), but we were given a 50" smart TV at christmas, which we use to watch netflix on, and occasionally youtube (and sometimes pandora, and every now and then, play the wii)

I could get programing, free, I just don't want it.
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sorrykb (profile), 23 Jul 2015 @ 8:53am

Re: Re:
Yeah... I'll bet $500 that won't happen. Original AC, come January 2017 you're going to owe a few of us some money.
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Anonymous Coward, 23 Jul 2015 @ 8:56am

I don't have a problem with whether they believe this or not. I made my decision a long time ago. I've never looked back nor do I regret in any manner that decision.

The latest trend seems to be lets make bundles that include the internet connection so we can hide those vanishing. Nearly all of them are doing this in some manner. It hides the fact the customers are disappearing by saying look we have this bundle package that includes internet and every one is on it.

New households are not wiring up. Old households are dropping the services of PPV. I do not want a tv. I've had enough of the stupid programming reduced to the lowest common denominator. I've had enough of programs that appear to be the excuse to serve commercials.

I did not realize how bone jarring commercials were until I removed them from my life. The peace without them is well worth terminating tv in it's various forms.
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Ninja (profile), 23 Jul 2015 @ 9:08am

Re:
I could get programing, free, I just don't want it.

It's mostly not worth it. When you do want to watch something it's usually in a time you aren't home or you need to sleep and if you want the option to record it and watch later you have to pay a premium for it. Netflix on the other hand delivers content whenever you want and that's a huge benefit. Not to mention they are producing and offering quality stuff even if the MAFIAA is trying hard to prevent them from having their content.

I also stopped going to the cinema (noisy, crowded, bad popcorn) but we (me and my girl) were wondering how awesome would it be to watch a movie that was in the cinema at home. I mean give money they wouldn't be earning otherwise. But then again we can't. And I don't really care enough to go pirate these days.
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Ninja (profile), 23 Jul 2015 @ 9:14am

I'd be ok with them ignoring the trend and choosing to die like Kodak if it wasn't for the fact that they are usually entrenched with Internet companies and a whole lot of lobbying for bad laws that keep their life-support on. At the expense of everybody else.
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JBDragon (profile), 23 Jul 2015 @ 9:30am

I cut the cord over 3 years ago and haven't looked back! I had Comcast for around 18 years paying for CableTV first until they finally offered Internet service and I got that. But with prices going up, up, up and nothing left to cut, I had enough. I don't want or need 100+ channels,m but to get that 1 channel yo want, you end up having to get the Big channel package and they know it and set it up this way.

I had enough of that. When I got my house I got U-Verse for Internet only and threw up a large Antenna for my TV. The price has since jumped up way to much for the speed I was getting so I just switched back to Comcast for Internet ONLY. Most of my TV I get from the Antenna. Most in HD and 5.1 surround. I just switched from Media center setup to a TiVo Roamio and Tivo Mini's because media center is going away in Windows 10.

This allows me to watch programs when I want to watch them and allows me to skip commercials. I can start watching in one room and continue in another. It's a great setup with the Tivo units. For the few shows I miss like AMC's "The Walking Dead" I can get a season pass in SD which is good enough for my needs and watch the new episodes the day after they air and commercial free. A few season passes is a drop in the bucket of my savings. Netflix and Amazon Prime I had for a long time including when I was paying for CableTV, so I don't really consider them a extra expense. Lots of great content on Netflix. The original programming is great. Lots of good shows if you just spend a little time looking around.
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tqk (profile), 23 Jul 2015 @ 9:44am

Way to spin it, Amy. Good job!
"... the volume of press around cord cutting doesn’t quite match reality."

So, 99.999% reality? 99.9999% reality? 99.99999% reality?

You're earning your keep, Amy. Keep it up.
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Violynne (profile), 23 Jul 2015 @ 9:48am

But I personally believe, and also by looking at our own statistics, that the volume of press around cord cutting doesn’t quite match reality.

That's because Comcast rapes the wallets of damn near every customer it has by forcing them to "bundle" their "internet services" making it such that the bundle is far cheaper than a stand alone internet connection.

Claiming cord cutting isn't happening while forcing people to pay for the cord is absolutely the most arrogant thing an ISP can say.
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PRMan, 23 Jul 2015 @ 9:55am

Re: Re:
Well, he does get a Genie DVR for free, so it wouldn't cost him to have it. But if you are used to living without it, I'm sure it does seem rather pointless.
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Anonymous Coward, 23 Jul 2015 @ 10:03am

I wonder if the entertainment industry will ever realize that if the build it we will come.

If I could get a service that let me watch ANYTHING that is available I would pay at least $50 a month over my internet bill. For that price I would even be willing to deal with some (not continuous) commercials. If there was a service that let me watch ANYTHING, ANYWHERE, with a very nice interface, search feature, parental controls, and anything else a consumer would want, I could see myself paying at least $100 a month. That is from a cord cutter. I have no interest in paying that kind of money for a service that provides an extremely limited selection of entertainment, that I have to watch at a specific time or deal with a DVR.

If the cable industry had done thing right they would have moved on demand services to both broadcasting and broadband. Expanded those services as quickly as they could, and done everything they could to move people over to the broadband service. If the had been first and kept people in there system they could have built in commercials to the new services and no one would have complained (well not too much). They simply have not kept up with technology and now they are going to catch up and survive amongst the competition, or die.
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tqk (profile), 23 Jul 2015 @ 10:03am

Re: Re: I'll tell you why...
My total Comcast bill is lower with internet+basic cable than with internet alone ...

That's just sick. I'll have to look into that. Thanks.
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JoeT, 23 Jul 2015 @ 10:07am

I'm not quite a cord cutter
In my anger and my shame, I'm not a cord cutter. I have cable TV.

However, that's only because 1) I *need* internet, and Comcast is the only game in town besides dialup, and 2) the HOA pays for basic cable as part of the HOA fee.

When I signed up and activated the account, I confused the poor tech on the other side of the phone to no end. "Can you tune to channel 17".... "No I can't, my TV is in box somewhere; can you just activate my internet?" It took us 2 months before we even bothered unpacking the TV, and that was just to watch DVDs and streaming on the larger display. We only called Comcast back to activate the TV when we wanted to watch the Thanksgiving parades and football, another 2 months later. Again, the tech was very confused that we'd been paying them for 4 months without ever having set up the TV.

It isn't so much cord cutting as it is not giving a s**t about TV. I can get massive variety of video entertainment, on demand, on my terms, and from cheap to free, on my computer. We watch far more Netflix than we do TV..... and far more Youtube than Netflix.

I didn't cut the cord... I just didn't care enough to bother unpacking it.
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tqk (profile), 23 Jul 2015 @ 10:08am

Re: Re: Re:
Original AC, come January 2017 you're going to owe a few of us some money.

I don't know. Conspiracy theorists are starting to look damnably prescient lately.
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Ninja (profile), 23 Jul 2015 @ 11:36am

Re: Re: Re: Re:
Sadly.
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Ninja (profile), 23 Jul 2015 @ 11:40am

Re: I'm not quite a cord cutter
Your case is what's keeping the numbers relatively stable. If somewhat the companies were forced to stop offering bundles today I'm sure the cable tv customers would see a significant decrease.
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Anonymous Coward, 23 Jul 2015 @ 12:54pm

Re: Re:
The only way they could stop the snowball would be to make cable mandatory. Look for an Obamacable bill in Congress before next year is out.
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Anonymous Coward, 23 Jul 2015 @ 1:29pm

I am on the verge of sending DirecTv a registered letter giving them 30 days to get all their possessions off my property.
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Peter, 23 Jul 2015 @ 9:03pm

With affordable internet access, cord cutting becomes real
it's not as though the cable companies were ever delivering something truly wonderful -- just third-rate programming fraught with ads.

I cast off Comcast when I found a low-cost internet provider, and now watch far better content with far fewer ads, thanks to Hulu, Amazon, Netflix, Sling TV, YouTube, Crackle, et al. Plus, I'm saving nearly $100 a month. I only wish I had made the move sooner.
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Nop (profile), 24 Jul 2015 @ 2:28am

Besides the Internet+Cable TV bundles mentioned by so many in the comments, the big reason for keeping Cable that I hear from a lot of people is live sporting events. If anyone comes up with a legal way to stream the popular stuff online, Cable TV will be dead, dead, dead.
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Anonymous Coward, 24 Jul 2015 @ 8:09am

14 Years Clean!
I have not had cable in 14 years.

I have had Internet, and yes, it has been through my cable provider.

However, it's almost 2016 and I STILL can't pick my own channels to watch, no matter where I am.

So, cable is staying cut.
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BernardoVerda (profile), 24 Jul 2015 @ 2:04pm

Re: Re:
Well actually, of late, the Repuglican members of the FCC have been going out of their way to point out that internet access is neither "necessary" nor a "right".
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Roger Strong (profile), 24 Jul 2015 @ 2:15pm

Re: Re: Re:
It's also worth mentioning that Obamacare's individual mandate emerged from the far-right Heritage Foundation. (Which now backs Ted Cruz.) It was about paying your own way, rather than making everyone else pay for your healthcare.

It was backed by Republicans from Bob Dole to Newt Gingrich to Jim DeMint to Mitt Romney and many, many more. It was mainstream Republican healthcare policy for 15 years, becoming commie Marxist socialism only in the instant that Obama adopted it.
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Peter, 24 Jul 2015 @ 10:32pm

Cutting the cable was an epiphany
I cut the cable just over a month ago. High quality content -- classic foreign film -- comes to me via Hulu Plus, while Netflix, Amazon, and Sling more than satisfy my cravings for trash TV.

It amazes me that anyone is still willing to pay usurious rates for cable. Is it loyalty, fear, or something else?
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Bruno, 5 Oct 2015 @ 11:20pm

Cord cutting will stun the industry-- just you watch
Here's the thing -- lots of people have thought about cord cutting, but they don't really know how to go about it. Once they figure out it's as easy as a Roku box and a few downloaded apps, and they can enjoy high def shows directly on their TV... Well, you might see them question why they pay $200+ a month (in the Bay Area) to Comcast for crappy content constantly interrupted by ads. That's right, they fork over all that dough only to be rewarded by an ever rising flood of commercials. Who in his right mind is willing to put up with that?
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tqk (profile), 6 Oct 2015 @ 6:20pm

Re: Cord cutting will stun the industry-- just you watch
Well, you might see them question why they pay $200+ a month (in the Bay Area) to Comcast for crappy content constantly interrupted by ads.

I just go to a library and check out music CDs, DVD movies, and books. No ads (that a fast forward won't get past). I don't understand why cable TV continues to sell, other than inertia. They're relying on their customers to remain ignorant. How long can that last?
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