Cord Cutting's Not-So Imaginary Any More: One Fifth Of Consumers Could Ditch Cable TV Next Year
from the not-just-a-river-in-Egypt dept
While cable industry executives are still intent on claiming cord cutting's either a mass hallucination or a fad, data suggests that ditching traditional TV for Internet video is gaining steam. A new study by PwC (PricewaterhouseCoopers) indicates that while traditional TV customers get 194 channels, they only watch, on average, about 17 of them. And while the study found that 79% of US consumers subscribe to some form of traditional pay-TV, 23% said they engaged in "cord-trimming" in the past year (reducing their overall package where they could), and 16% said they had unsubscribed from pay-TV services in the past year.And there's no mystery as to why this is happening. The full PwC study notes that cost (pdf) is the primary reason:
"Cost is an unavoidable aspect of consumer decision making—and the most important factor for cord-cutters. 57% of cord-cutters say they choose not to subscribe to cable because “the monthly costs are just too high."Behind cost, also unsurprisingly, comes annoyance at the lack of control and flexibility in most cable packages:
"When asked what would entice consumers to re-subscribe to pay-TV, 56% identified “being able to customize my package to exactly the channels that I want” as their number one motivator. And this sentiment is not exclusive to cord-cutters: 45% of current pay-TV subscribers said they most preferred an “a la carte” package of channels that they could customize themselves."And that's nothing new. Consumers have been begging for more flexible and cheaper programming options for fifteen years or more. Historically, the cable industry's response has been that a la carte TV is impractical because it would demolish the existing pricing model, cause higher rates, and force less-watched channels off the air. But all of that's happening anyway. And while a la carte TV was portrayed as a bogeyman, the industry was busy fighting off any pricing innovation of any kind. In fact, it has taken fifteen years of sustained bitching just to get a basic channel bundle without ESPN in it.
The end result is obvious. The PwC study notes that last year, 91% of consumers said they could see themselves subscribing to cable in the following year. This year, that figure dropped to 79% as a growing number of Internet alternatives began to emerge. In other words, the firm believes that one-fifth of consumers could ditch their cable subscription in the next year now that they have some alternatives to switch to. A similar study last week by eMarketer makes the same point with a slightly longer timeline, claiming that one in five homes will no longer subscribe to traditional television by 2018:
"In 2015, there will be 4.9 million US households that once paid for TV services but no longer do, a jump of 10.9% over last year. And that growth will accelerate in the coming years, with the number of cord-cutting households jumping another 12.5% in 2016. In fact, by the end of next year, the number of US households subscribing to cable and satellite will drop below 100 million."While the slow and steady pace of the shift is what fed industry denial, it also means there's still plenty of time to do something before Internet video starts really demolishing legacy TV revenues. And it's not rocket science: offer just a little more flexibility at a notably better price point (and maybe try sucking at customer service just a little bit less). Instead, most cable and broadcast execs simply mumble something about the great value cable provides while keeping their heads buried deep in the sand, confident they can lean on broadband usage caps to counter any lost TV revenues down the road.
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Filed Under: broadband, cable, cord cutting, internet, tv
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Adapt or be left behind
A difference of 12% in one year. Cable companies either start waking up to the fact that there is very real competition on the market, and it's only going to get worse(for them) as time goes by, or they're going to find themselves left in the dust in just a few years at that rate.
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Re: Adapt or be left behind
It's actually worse than that if you care to get pedantic about it (and make some assumptions -- I couldn't easily find hard numbers).
If we assume that only the 91% from last year re-subscribed and only 79% of that remaining group will subscribe, that's actually a difference of ~13.2% from the previous year.
Not that much of a difference, I know. But I wanted to point it out anyway. My inner geek just had to get out. Sorry. :-/
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Re: Re: Adapt or be left behind
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Re: Re: Adapt or be left behind
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Re: Re: Re: Adapt or be left behind
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Re: Adapt or be left behind
The point being, Kids are growing up without cable. Or at least used to Netflix type service and the Internet. Won't see any need to sign up for some TV package. This will continue to grow. 100 channels of crap and nothing on. Who wants to pay for that?
I already have way to much content to watch. I don't have time to miss Cable TV!!! With the Internet, you're no longer limited like it the past with a few Analog OTA channels. Now there's more Digital OTA channels and the Internet.
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The problem is media consolidation.
1.) Comcast/NBCU
2.) Disney
3.) Fox
4.) Time Warner
5.) CBS
6.) Viacom
7.) Scripps
8.) Discovery
9.) Hearst
And... who else?
Everyone talks about the excess channels in the cable bundle, but nobody talks about how few companies actually control it. That seems to be the biggest problem here. None of these companies are willing to shut down even the smallest of their channels as long as 90 million+ people are still tied to the bundle.
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Re: The problem is media consolidation.
And of good programming that they do develop -- they don't re-run it from time to time. Because it is too valuable to watch.
One of the premises of going to cable several decades ago was that with pay TV there wouldn't be commercials. Yet not only are there more commercials than actual content, they also put these bugs up on your screen, covering the programming with people walking around, after the commercials end.
Another premise of going to cable was that by paying for TV, you would get better quality programming. Yeah, yet another Reality TV show.
And the rates continue to go up and up and up. The quality down and down. The ads will soon remove any time left for actual content.
Yet it remains a complete mystery why people are cutting the cable cord.
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Re: Re: The problem is media consolidation.
That's simplified, but hopefully it explains why the people who hated "reality", soaps, etc. were not being catered to and disappeared to services which did. The other major question is how many people hate the content but stay because they are forced to buy TV with their internet connection...
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Re: The problem is media consolidation.
1. Make a package of cookiecutter channels.
2. Sell it as a bundle.
3. Use the money to open more channels that cater to a smaller segment,
4. Sell the bundle at a slightly higher price and continue said diversification ad infinitum.
The problem is that the splitting into smaller segments is a beginning approximation of on demand. But because the real deal is now available on line the value of the segmented market is a lot lower.
The first logical option would be to consolidate the number of channels, with the cord-cutting increasing and drive the negative spiral untill the tv-market settles.
Second logical option would be to compete on the online premises, accept the lower income and produce cheaper shows.
Third logical option would be to join film and music industry and fight innovation and particularly internationalisation politically (geoblocking is a must since removing that would kill the current rights-market. Stay tuned for the absurdity of a "Digital single market" in EU that will run next year. It is right up Techdirts alley!).
Fourth logical option would be to go the IP-shakedown way.
Fifth option is the make money way. Nobody knows it yet.
Sport-rights are far overpriced and the semimonopoly-bubble on valuation of flowtv-content is exploding. Gotta say that having a status quo TV-empire is going to require innovation of business or die. The alternative is riding the decline and nobody wants that!
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"Pay-TV companies must recognize that cord cutters aren’t against cable—they are simply for greater customization, control and perceived value"
Perceived value - bingo. People may have whined about cost in the past, but they weren't "cord cutting". So, why is it an issue now? Not only are prices higher, but they're not getting value for money. People will pay $100/month if they feel they're getting $100/month of value, even if they recognise they're also paying for crap on top of what they use. When people realise they're paying $100/month for $20/month of value, they start to switch. they don't necessarily want to switch and might be comfortable with what they have, but if they only have $20 value for $100 outlay, they can give up a little comfort.
It's strange - outside of a few entertainment industries, most companies seem to understand this to some degree. Why is it so hard for these companies? A sign of a market that's been too skewed for too long, I think.
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Re:
Today the idea of watching exactly what you want when you want as often as you want is a more valuable idea. The only roadblock today is the "what you want" part.
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Re:
And there are folks that see ONLY cost and don't care about value.
There's also the reality that the cable-cos - among other business' - have been raising prices but the subscriber's incomes have been stagnant or dropping. When prices go up but incomes don't, something's going to give. And subscription TV of any kind is not an essential life need.
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Such people do care about value, it's just that for those people the value of the service is negligable so cost becomes the most important factor by far.
"Value" is a very personal and relative thing.
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Re: Paul
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Re: Re: Paul
The theatrical movie industry survived despite the "Boston Strangler" of VHS, cable needs to work out how it will survive, if it can offer the value that people want. If their answer is "we have HBO", it may fail as surely as Blockbuster.
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Frank, call the lawyers! We need to litigate like there's no cable tomorrow!
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Re: Do something...
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the economy
Hopefully, regardless of the economy, more people drop cable to the point where citizens in every major (at least) US city can choose between Comcast, Time Warner, Cox, CableVision, etc... when they sign up for cable/internet access. Unfortunately, the pessimist in me says that any major downturn in cable subscriptions will only lead to higher internet access bills, and more consolidation (Mergers & Acquisitions) in the ISP/Cable industry.
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Re: the economy
Saying that the internet is just solely entertainment is like saying that phone lines are just communication and you can live without them. You cannot in today's world live without either of those, either because you need them to get a job, or because you need them to survive without one.
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Re: Re: the economy
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Re: the economy
Oh, really? Smarter people beg to disagree - remember "panem et circenses". Unfortunately, as far as I'm concerned, cable TV has nothing to do with "entertainment" any more, no matter how cheap it could possibly get.
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Get ready for your Internet connection prices to SOAR
Comcast has already started on this path with their usage caps and extra charges. It will get much, much worse.
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Re: Get ready for your Internet connection prices to SOAR
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Re: Re: Re: Get ready for your Internet connection prices to SOAR
Through such educational sites as www.muninetworks.org and www.nextcenturycities.org the need for a non-partisan, affordable and accessible community-centric broadband network is gaining ground fast.
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I bet the cable companys don't care
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Re: I bet the cable companys don't care
If I could get high speed internet that had no caps I would get rid of cable tomorrow. I even looked into Clear wireless before they got bought out, they had low signal strenth in my area. I couldn't get it to work. I even had a salesman out who thought I was just stupid. He could not get it to work either.
That is a lot of story to say that we need unlimited broadband and we can get rid of a lot of excess baggage.
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I would switch if I had options
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Re: I would switch if I had options
That still is not suitable for a set top box. But not everyone is aware that you can watch Netflix on Linux without a VM.
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Re: Re: I would switch if I had options
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Re: Re: I would switch if I had options
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Cord Cutting
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MyCableTV
They don't go the extra smile, but that's what they tell you.
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Goodbye DirecTV
I have my OTA antenna setup already to go along with the Channel Master DVR+ and I'm ready to go! Plugged in my new Roku 4, along with Plex and start watching my movie/tv show collection!
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