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

Wed, Dec 23rd 2015 6:30am — Karl Bode

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.

Pwc-Video-Consumption-Report-3 (PDF)Pwc-Video-Consumption-Report-3 (Text)

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Filed Under: broadband, cable, cord cutting, internet, tv

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That One Guy (profile), 23 Dec 2015 @ 7:04am

Adapt or be left behind
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.

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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Dave (profile), 23 Dec 2015 @ 7:08am

The problem is media consolidation.
How many companies actually own those 194 channels?

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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PaulT (profile), 23 Dec 2015 @ 7:15am

I glanced at the study because I didn't see an important word mentioned here. I see *cost* in the quotes but not *value*. So, from the PDF:

"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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Anonymous Coward, 23 Dec 2015 @ 7:18am

Do something you say?

Frank, call the lawyers! We need to litigate like there's no cable tomorrow!
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Anonymous Coward, 23 Dec 2015 @ 7:42am

you used the word "could". a lot of things "could" happen.
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jupiterkansas (profile), 23 Dec 2015 @ 7:43am

Re:
Once upon a time the idea of a couple hundred channels all showing content 24 hours a day was an incredibly valuable idea.

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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Anonymous Coward, 23 Dec 2015 @ 7:47am

Re:
...I see *cost* in the quotes but not *value*....

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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scatman09 (profile), 23 Dec 2015 @ 7:51am

the economy
Is the economy, namely high unemployment, counted as a factor in these "studies"? Cable TV is, primarily, about entertainment, and entertainment (just like internet access) is not a necessity. So, times get tough and non-necessities get cut from people's personal budgets.

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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Anonymous Coward, 23 Dec 2015 @ 8:09am

Re: the economy
The internet isn't a necessity? I don't want to assume anything about you, but from the sounds of it you don't live in a modern city. From looking for work, online education, using the network to network. Even if you take those away, taxes, banking, bills, price shopping, and other daily activities all take place online.

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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ottermaton (profile), 23 Dec 2015 @ 8:11am

Get ready for your Internet connection prices to SOAR
There's no question in my mind that the end result of widespread cable cutting will be broadband connection pricing going through the roof. It will be inconceivable to those running the cable companies to have their profits be reduced by even the smallest of margins ("I MUST have that 3rd yacht, dammit!")

Comcast has already started on this path with their usage caps and extra charges. It will get much, much worse.
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Marky, 23 Dec 2015 @ 8:14am

I bet the cable companys don't care
People may cut their cable TV service, but they won't cut their broadband... which comes from their cable company. If they lose a bunch of cash from the TV side, they'll just boost the broadband price.
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ottermaton (profile), 23 Dec 2015 @ 8:32am

Re: Adapt or be left behind
A difference of 12% in one year.

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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Thomas (profile), 23 Dec 2015 @ 8:36am

Re: Paul
People also didn't switch before because they had no options. If you wanted video entertainment, it was tv or rented movies, and that's it.
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DannyB (profile), 23 Dec 2015 @ 8:39am

Re: Re: Adapt or be left behind
But also remember that this difference is AFTER all of the cord cutting that has been going on for years now while they were in denial. I suspect a frightening (to them) amount of cord cutting has already happened now that they are beginning to be forced to acknowledge it.
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DannyB (profile), 23 Dec 2015 @ 8:44am

Re: The problem is media consolidation.
This probably has something to do with why the programming sucks and is so repetitive, duplicative, and formulaic. Oh, another procedural cop show. Oh, another hospital soap opera. Oh, another stupid sitcom. Few original ideas.

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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Anonymous Coward, 23 Dec 2015 @ 8:47am

I would switch if I had options
If Netflix would make content available in a way that MythTV could access it as easily as streams recorded over-the-air or off cable, I would switch today. Instead, you have garbage like "Run a browser in a VM running Windows XP" and "install Google Chrome on your media system."
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Anonymous Coward, 23 Dec 2015 @ 9:14am

Re: Get ready for your Internet connection prices to SOAR
Well, too bad for them. They can either accept lower profits or be torn apart by the law when they push too far with their 'valuable caps'. Perhaps even divived into thirds, since they pretend to be phone companies too.
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DannyB (profile), 23 Dec 2015 @ 9:20am

Re: I would switch if I had options
You mention Google Chrome. I was not sure you were aware that you can install Chrome directly on Linux, without a VM, and watch Netflix in the Google Chrome browser.

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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John Fenderson (profile), 23 Dec 2015 @ 9:29am

Re: Re:
"And there are folks that see ONLY cost and don't care about value."

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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Groaker (profile), 23 Dec 2015 @ 9:36am

Re: Re: I would switch if I had options
You can also use the HDMI connector from your computer and plug it into the HDMI connector on your TV. About 30' is the maximum distance that HDMI will go, so avoid the 50' and up connectors for sale.
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Anonymous Coward, 23 Dec 2015 @ 9:38am

Re: the economy
"and entertainment (just like internet access) is not a necessity"
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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Anonymous Coward, 23 Dec 2015 @ 10:14am

Re: Re: I would switch if I had options
Yes, but it will still be Google Chrome with Encrypted Media Extensions, even if it is running natively and it will still require an x86 or amd64 computer. To clarify the above remark, I do not need Netflix to offer up some Myth extension. I just need them to stop actively interfering with FOSS access to the content. Once the requirement to use Encrypted Media Extensions is gone, I will be happy.
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Lollypop (profile), 23 Dec 2015 @ 10:18am

I don't have cable. I don't even have a tv. However when house sitting at friends who do I'm amazed at how horrible the cable box is programmed. Should be able to simply filter out all currently unsubscribed channels from the 2000 in the guide. Then also filter out pay-per-view. And then show only HD channels instead of their SD counterparts. But no. I spend hours clicking on channels only to see "you are not subscribed to this channel." Well why the hell is it in the guide? You can set up a favorites list but it's a PITA to get to and also add channels to.
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Anonymous Coward, 23 Dec 2015 @ 10:32am

Re: The problem is media consolidation.
It is the license circle-jerk where one channel is very expensive to maintain, while 10 is so much cheaper per channel:

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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Anonymous Anonymous Coward, 23 Dec 2015 @ 10:37am

Re: Re: Adapt or be left behind
I think it may also be hard to quantify those who like me still pay for a cable + broadband package because it is cheaper than a broadband only package. My cable box is in a box in the corner and has not been connected for a couple of years. Broadband still works.
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djl47 (profile), 23 Dec 2015 @ 10:58am

Cord Cutting
I cut the cord years ago and don't miss the river of effluent. Talking heads pontificating about football year round, boringly predictable sitcoms with punchlines so lame they have to tell you when to laugh, Crime dramas with nearly invincible über criminals, So called reality shows, infotainment masquerading as news ... When the content creators succeed in making something decent the show succumbs to cookie cutter scripts, car chases and machine guns after a couple of seasons. Google "Why I hate Star Trek" and read about how some writers "Fill in the tech".
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ThatDevilTech (profile), 23 Dec 2015 @ 11:06am

Re: Re: Get ready for your Internet connection prices to SOAR
I wonder how long it will take for the monopoly/duopoly companies to get busted up like Standard Oil and Ma Bell did back in 80's. It's funny how things are cyclical. It will just come down to the consumers finally having enough of the crap AND Congress getting out of the ISP/telco pocket. Only time will tell, but it couldn't happen soon enough if you ask me.
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Michael Long (profile), 23 Dec 2015 @ 1:06pm

Re: Re: Re: Adapt or be left behind
Sure about that? We have Cox and the Internet-only bill is MUCH less than the cable/internet bundle deal.
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publius (profile), 23 Dec 2015 @ 1:49pm

Re: Re: Re: Get ready for your Internet connection prices to SOAR
Prepare for a paradigm shift. The jig is up. Constituents are petitioning their local governments to the value and critical nature of broadband networks. Most of all, they are increasing the awareness of the alternatives to the false choices and misrepresentations of free markets we have been subjected to for decades now by these cable and telco monopolies and duopolies.

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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Disgruntled Fan, 23 Dec 2015 @ 2:23pm

MyCableTV
Why in the hell can't I get my teams televised during football and baseball seasons on my cable tv? I'm paying a fricking exorbinant amount of money each month for services that spam me and make no sense in the GOSH DARN 21st Century..

They don't go the extra smile, but that's what they tell you.
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Dogman, 23 Dec 2015 @ 3:55pm

Goodbye DirecTV
Signing off DirecTV come Jan 15, 2016. Have had enough of price increases. Another one coming from DirecTV at the end of January 2016. Will have dropped them by then!

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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PaulT (profile), 23 Dec 2015 @ 5:43pm

Re: Re: the economy
Indeed. In the modern world, the internet is like a phone or a car. Sure, it's possible to go without in many places but, in the this world, you will not have the same opportunities as others. Great if you make that conscious choice to do without aware of the risks, bad if you're forced into a minority position that limits your options with no say in the matter.
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PaulT (profile), 23 Dec 2015 @ 5:48pm

Re: Re: Paul
Well, I would hope that goes without saying. If your choice is HBO in your home or Blockbuster down the road, you may choose HBO for various reasons. If the choice is the cable channels or the Netflix channels without standing up for similar quality content, you may choose the latter - just because this wasn't an option in 1995, that doesn't mean it won't destroy your business in 2015.

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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PaulT (profile), 23 Dec 2015 @ 5:53pm

Re: Re: The problem is media consolidation.
Funnily enough, that's been dealt with here before. Channels tended to get their information from imperfect places like Nielsen. That company refused to include streaming and downloads. So, their figures showed them that people wanted more reality and so on. But, the people who didn't want that disappeared. This snowballed until they decided to include such figures, at which time they apparently had a realisation that people were leaving , and partly due to the content which they supplied on faulty information.

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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Raging Alcoholic, 23 Dec 2015 @ 8:51pm

Re: I bet the cable companys don't care
I would have gotten rid of cable shortly after Net Flix showed up but Comcast said it would stop internet on anyone who went over 250 gb.

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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Anonymous Coward, 24 Dec 2015 @ 5:43am

Re: Do something...
there's still plenty of time to do something before Internet video starts really demolishing legacy TV revenues
And their solution is obviously data caps on the internet service they also supply.
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Anonymous Anonymous Coward, 24 Dec 2015 @ 7:52am

Re: Re: Re: Re: Adapt or be left behind
I am certain about my providers rates. Others have mentioned a similar problem with their available providers. I know nothing about Cox's rates.
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JBDragon (profile), 28 Dec 2015 @ 11:21am

Re: Adapt or be left behind
My brothers kids pretty much only watch Netflix. He's since cut the cord like I have. His kids didn't know what a commercial was for quite some time until they saw some at someone else's house and thought they were neat.

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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