Once Again With Feeling: Cord Cutting Is Not A 'Myth'
from the ignoring-the-bigger-picture-to-make-a-point dept
For years we've noted how the cable industry (and companies that feed off of it like Nielsen) have been in stark, often comic denial about the changes happening in the legacy cable sector. But every few months or so, a select rotation of news outlets also feel compelled to pooh pooh the entire notion of cord cutting, broadly declaring that the idea is a "myth" perpetuated by a select cadre of mean bloggers hellbent on confusing the public for some unfathomable reason. More often than not it's the editors trotting out the "myth" headline to gain hits, despite the story itself doing a piss poor job actually debunking the concept.One case in point is the Boston Globe, which recently proclaimed that because cord cutting is happening slowly in a country jam-packed with Luddites, the phenomenon at worst isn't real, and at best isn't important:
"The thin trickle of households that have dropped pay TV in recent years is barely enough to make a dent in the industry. Just under 100 million households have some form of pay TV according to Nielsen surveys, whether it comes via cable, satellite, or alternatives like Verizon Fios and AT&T U-Verse. That’s lower than it was a few years ago, when 105 million households had pay TV, but it’s hardly a revolution and there’s no sign of an accelerating trend."A five million user drop hardly constitutes a "myth," but there's another problem with that analysis: just looking at pay TV subscriber totals doesn't tell the full story. One, several cable companies have started including their own $15-$40 standalone streaming service customers in with those totals, meaning the total tally of "pay TV subscribers" now includes -- ironically -- customers that have cut the cord. For example, Dish Network last quarter proclaimed it saw a net gain of 35,000 pay TV customers. But the company is now including its Sling TV streaming video customers in that total. Subtract those, and Dish actually lost an estimated 215,000 traditional TV customers.
Comcast has now quietly started doing something similar after launching its $15, creatively-named "Stream" service in several beta markets. And while yes, these are technically still "paying TV customers," the difference is more than just semantics if you're analyzing which customers still subscribe to traditional television -- and paying upwards of $120 a month -- and which customers have flocked to much, much cheaper standalone streaming platforms (still a rarity among cable companies that don't want to cannibalize their own TV rolls like Dish appears willing to do).
The Globe continues:
"A separate survey by the Leichtman Research Group found that about 83 percent of households had pay TV subscriptions in 2015. That's down from the 87 percent with pay TV in 2010, but actually higher than the 81 percent in 2005. Bottom line, pay TV remains a staple of the American diet.Again though, just looking solely at total TV subscriptions doesn't illustrate what's actually happening. Another trick cable companies have used for years is to offer broadband and TV service bundled at a promotional price point significantly cheaper than just getting broadband alone. As a result, you've got millions of households that sign up for TV only because it's the better deal. In many cases these users, especially Millennials, aren't even using -- and didn't want -- the traditional TV service they signed up for. And, given they're on short-term promotions, it's far from certain they'll be sticking around. That's a short-term "solution" that makes investors feel cozy looking at the raw numbers, but it doesn't solve cable's real problem, and it doesn't somehow prove cord cutting isn't real.
And now the newest trend is forcing customers to subscribe to legacy TV if they want to avoid usage caps, which is going to continue to prop up traditional TV subscriber tallies.
To really understand shifting viewing behaviors, analysts have to look at how many customers are actually using the TV subscriptions they're signed up for. That's why traditional subscriber totals have remained static or in slight decline, but broadcast and cable ratings have been in free fall. As ESPN has painfully realized, this is also thanks to "cord trimming," or the act of reducing overall programming packages in an attempt to avoid relentless rate hikes -- more common than severing the cord completely. None of this is mythical, just a little more complicated than claiming the cord cutting is akin to yeti and unicorn.
Analysts also tend to forget to factor in the fact that traditional cable TV subscriptions are either flat or in decline as the housing market recovers and grows. In short, that means millions of new houses and apartments aren't signing up for traditional cable, something that's also left out by just looking at subscriber rolls. Sanford C. Bernstein analyst Todd Juenger penned a research note this week pointing out that once people are faced with re-subscribing to cable after moving, many aren't bothering. In many instances, people aren't cutting the TV cord, they're refusing to connect it in the first place. That's especially true of Millennials heading out into the wild for the first time.
Like the Boston Globe, Techcrunch also recently penned a missive declaring cord cutting a "myth," but like most other articles of this type failed to factor in the above details. It also makes a few odd logical leaps, like declaring that cord cutting isn't a thing because consumers have "their own definition of TV":
The story goes, "Cord-cutters are canceling their cable services and going over-the-top, therefore it's the demise of the television business as we know it." This premise is wrong. Here’s why: The consumer has their own definition of TV. To start, we should clarify that consumers now perceive “TV” as content, not as content delivered through a linear hardware box in their living room. HBO, Netflix, Amazon, Hulu, Buzzfeed — consumers don’t care about where content derives, they only care that it’s quality.In short, Verizon-owned Techcrunch had to redefine television to try and make the point that "cord cutting" as a concept somehow isn't real. But nobody is arguing that TV as a concept will die; it will just mutate. Traditional cable operators will eventually realize they need to compete on price, and they'll ultimately adapt. Right now though, the name of the game is fiddling with subscriber TV totals to calm investors, while generating the illusion among consumers that they're competing on price and flexibility. The result is so-called "skinny bundles" that are intentionally underwhelming and saddled with post-sale charges and fees, while the cable and broadcasters happily push bi-annual rate hikes on the majority of their legacy TV customers.
So no, the traditional cable industry isn't "beating cord cutting," it's just fiddling with subscriber totals and forcing millions of customers to take TV service they may not want. And cord cutting isn't a "myth," many analysts just aren't yet seeing the full picture.
The reality is that cord cutting is a very real, but very slow phenomenon. Slow in part because many TV subscribers are intimidated by new technology, something that will shift as these services get better and easier to use (and, to be blunt, old cable users die off). It's also slow in part because broadcasters were afraid of killing the legacy cash cow and licensing their content to potential disruptors like Apple. But the flood gates are slowly opening, and 2016 and 2017 are slated to be packed with new, cheaper streaming TV options that should accelerate the trend to the point where denial will no longer be an option.
Claiming cord cutting is a manufactured fantasy certainly helps cable companies and the research firms making a living telling myopic cable executives precisely what they want to hear. And right now, what these executives want to hear is that cord cutting and cord trimming are just a small blip on the radar, easily conquered without seriously competing on price. These executives also want to be told that all of these problems will magically evaporate once Millennials start procreating. Once that happens, the theory goes, Millennials will suddenly realize that they really love traditional cable, high prices, and utterly atrocious customer service. So really, at the end of the day, who's telling myths, exactly?
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Filed Under: cord cutting, internet, myth, tv
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My children are like yours. Not a single one of them is likely to ever subscribe to cable. They don't even watch broadcast TV. Their TV viewing revolves around YouTube and, to a lesser extent, Netflix.
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Sound familiar?
When I left home, I lived in places that offered cable, but I never had any interest in subscribing unless subscription was baked into my rental agreement. In those cases, I hooked the cable up to my VHS recorder, which was the only tuner I had, and played stuff through my computer monitor. This was back in the day when you could go to a movie for $2, or $5 for recent movies, so I rarely watched any programmed content.
My kids have now grown up without a television set in the house, and are none the worse for it. There are some streaming shows that they like to watch on an iPad from time to time, and at one point I collected a bunch of DVDs and converted them for storage on my NAS so the DVDs wouldn't get damaged, just in case I wanted to watch something on my computer.
So I've always watched made-for-TV content, but usually a week/month/years after it was designed to air, on MY schedule. I really can't imagine not doing that. I also can't imagine my millennial kids doing that.
And I think I'm a good example of a "proto millennial" who procreated and never felt the desire to turn to cable/programmed TV. Why do that, when I can go to the library and sign out the shows my kids want to watch, and then return them and not have Dora the Explorer videos in VHS sitting around when I no longer have kids wanting to watch the shows, nor a VHS player to play them on?
Traditional TV had an argument for why VHS/DVD/Blu-Ray wouldn't kill it that made sense. They appear to be attempting to stretch that argument to cover streaming and digital renting/purchasing as well, and THAT makes absolutely no sense. I'm a living example of why.
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The next year, my dorm was wired and a neighbor had free cable by some accident, and me and a few people split off of that. But it only slightly increased my interest in having cable, given that I'd gotten used to living without it. Maybe cable companies should run free cable to all dorm rooms, so people never get used to going without it. (And networks should stop airing reruns during the Christmas and summer breaks—now, students return to a home with cable and find nothing worth watching.)
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includes forced subscribers too
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Re: includes forced subscribers too
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Re: includes forced subscribers too
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Redefine away!
Old term = New Term
Broadcast TV = OTA Broadcast
Cable TV = Proprietary Broadcast
IP TV (FIOS) = Proprietary Broadcast
On Demand Video (from Broadcast company) = Walled Garden
Streaming Video = User Chosen Content Content
Cord Cutting = Broadcast Cutting
Most people aren't cutting cords in the sense the no longer watch anything, they're opting for choice over broadcast. The concept that you have to tune in at a certain time or remember what channel a show is on, that's what's going to go away. That's what "Television" used to mean -"broadcast entertainment" as a mass transmitted one-way media consumption platform. Now television means whatever you choose to put on the big screen in your house, and broadcast companies are still bleeding subscribers and lashing out.
So what is their solution? Offering the same broadcast content delivered by a different protocol on your computer or phone? Increase the number of broadcast channels, hoping one may match a user's interests? Offering crappy "VOD" titles packaged with the same broadcast subscription people don't want? Making their broadcast subscription integral to the Infrastructure they hold a monopoly on, or charging more to deliver competitor's content? Sure. Those will all work for a while. But they're not sustainable, it's like fighting the tide. If they're serious about competing on content, they need to compete on content and accept that they will be a part (a small part) of a customer's entertainment choices. The age of Studio/Broadcaster/Cable control is ending. The time of consumer choice has come.
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What will they do when their subscriber numbers hold constant, but their Nielsen rating start falling off of the cliff, start on insisting of a minimum number of viewing hows to qualify for uncapped broadband.
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Re: Minimum Viewing hours
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When I bought an early DVR, my VHS-addicted wife said "why do we need that?" Once it was installed and working, it became the main source of entertainment. A few years ago, the networks would offer "missed episodes" online. Then they wised up (or were told by their affiliates) and required a cable user login to view old episodes... then we couldn't watch those episodes while out of the country...
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Why do you think that adverts became so loud and obnoxious, it gave then a chance of grabbing peoples attention. If the cable box is disconnected, then that tactic fails.
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There are some good online documentaries and podcasts on the Nielsen rating racket; all worth viewing. It's basically a custom picked set of midwest families that decide what gets put on TV and what gets dropped. And they also define what "normal" is, even though it's a circular definition, and doesn't include anyone who doesn't have cable.
At least Nielsen is getting a little better now and includes streaming media as well as OTA and cable media now. I think they settled a lawsuit regarding that technology recently.
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Because sooner or latter their sample set will include people who only subscribe to cable to get uncapped Internet access. When VOD only watchers becomes a significant part of their sample set it will show in their rating.
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So "sooner or later" becomes "when there are fewer people still watching traditional TV than Nielsen selects as their target group." It'll eventually happen, but probably not for another 10-20 years.
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cord cutting in the UK
Cable cutting? You'd better believe it
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Re: cord cutting in the UK
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Soon that will change to also include "catch up TV", e.g. BBC iPlayer - but still not Netflix or similar services.
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Cableism
All praise the mighty Cable Box, and let those tempted to stray burn in the Noise of the Evil Lord Cord Cutter.
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Would cut, but cannot figure how to
We watch all the foodporn and houseporn channels + MSNBC. Don't care about any other channels.
So, how do I do it?
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The exact same thing use to be true for HBO with their HBO Go, you were required to be a TV subscriber.
These days, HBO offers HBO Now, which is it's own subscription that does not require a TV subscription. I can only hope more channels will do these and abandon the cable gatekeepers. Although, that might create a new problem, where people have 5, 10, or 20 separate subscriptions to manage.
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Realize it helps Dish's numbers, but Sling has HGTV and many of the other foodporn/houseporn channels as part of their default streaming plan.
Roku handles sling just fine.
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Re: Would cut, but cannot figure how to
If the latter, then there is a ton of that sort of stuff available direct from content producers both on YouTube and elsewhere.
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As long as you have an internet connection, you've got access to not only their current episodes, but all the old ones too, on YOUR schedule, not theirs.
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Basically, much like a refined form of podcasting.
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Would it seem insignificant if every person in Washington DC, Wyoming, Vermont, Alaska, North Dakota, South Dakota, and Delaware all got rid of their cable subscriptions in a single year? Again, that's pretty close to the difference.
Note that these are just based on state populations. I wouldn't be surprised if you could fit some or all of those last three people in Massachusetts or maybe the entire state of Montana if just looking at people who are or could potentially be subscribers.
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Also, I recently found out that there are tons of "TV" apps for the Amazon Fire TV that gives free shows or continuous videos. I was looking for news channels for my dad and CBS has a 24/7 news channel for free. NBC has an app that plays news videos and will go to the next video for free. There is a large pool of content around that are free. It does take some time looking for it. I see the demise of pay TV coming very soon, maybe one generation, compared to "people can't live without pay TV". It is much like people cutting the home phone when everyone has a cellular phone.
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With the exception of baseball (yey for the Sling "Alternative Plan",) I rarely watch SlingTV on their schedule, since most of the channels have VOD capability. I think I've watched Game of Thrones once when it was scheduled, most of the time I go in, find what I want to watch on their VOD menus, and then move on. Even if the channel doesn't have their entire catalog available as VOD, they tend to have the programs played throughout the day, and sometimes the week, available from the menu.
The only thing I can't do with sling is watch the baseball game on my phone...darn blackout restrictions!
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Cox gets paid based on the number of eyeballs they've got watching ads; adding new eyeballs for cheap is a net gain.
It's that simple.
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The boiling frog analogy
So, sure, a loss of 5 million subscribers over a few years isn't too bad. And another 10 million next year still isn't too bad. And another 10 million after that isn't too bad.
But, wait, that's now 25 million out of 100 million or 25% of the total. Is that still considered not too bad?
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1) how many people subscribe to cable TV.
2) how many of the above people actually have cable boxes.
3) how many of them watch any TV during the month.
That would give you a clearer picture of what is actually happening cord cutting wise.
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Shaved my cord
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Cord Cutting Is Not A 'Myth'
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