Yet Another Report Says The Rate Of TV Cord Cutting Is Worse Than Anybody Thought

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

For years the traditional cable and broadcast industry has gone to comedic lengths to deny that cord cutting (getting rid of traditional cable TV) is real. First, we were told repeatedly that the phenomenon wasn't happening at all. Next, the industry acknowledged that sure -- a handful of people were ditching cable, but it didn't matter because the people doing so were losers living in their mom's basement. Then, we were told that cord cutting was real, but was only a minor phenomenon that would go away once Millennials started procreating.

Of course none of these talking points were true, but they helped cement a common belief among older cable and broadcast executives that the transformative shift to streaming video could be easily solved by doubling down on bad ideas. More price increases, more advertisements stuffed into each minute, more hubris, and more denial. Intentional blindness to justify the milking of a dying cash cow -- instead of adapting.

But we're slowly but surely reaching the point where the rise of the streaming video revolution can't be denied, with data indicating it's worse than anybody thought. While the pay TV sector lost another 1 million subscribers last quarter, those totals don't factor in those that bought a new home or rented a new apartment, but chose not to sign up for cable. Many of these folks are dubbed "cord nevers," having never bought into the value proposition of paying $130 more per month for a bloated bundle of largely-unwatched reality TV channels from a company that treats paying customers with disdain.

Meanwhile, a new report by eMarketer this week indicates that the pace of customer defections is notably higher than most previous estimates. The firm notes that it was forced to reduce its estimate for US TV ad spending due to faster-than-expected growth in cord-cutting:

"eMarketer expected a slowdown this year in TV ad sales, after 2016 benefited from both the Olympics and US presidential election,” said Monica Peart, eMarketer’s senior forecasting director. “However, traditional TV advertising is slowing even more than expected, as viewers switch their time and attention to the growing list of live streaming and over-the-top [OTT] platforms.”

All told, the firm predicts that by the end of this year, there will be 22.2 million consumers over the age of eighteen that have cut the cord, up 33.2% since 2016. And while there's still a whopping 196.3 million US adults that subscribe to traditional pay TV (cable, satellite, or telco), that tally is down 2.4% over 2016 levels, with the defection rate only accelerating. The cause? A strange idea known as competition and, by proxy, lower prices:

"The acceleration of cord-cutting is the result of several factors,” said eMarketer principal analyst Paul Verna. “First, traditional pay TV operators are increasingly developing streaming platforms, such as Dish Network’s Sling TV. Second, networks such as HBO and ESPN have launched standalone subscription services that allow users to tap those channels without a cable subscription. And third, digital players like Hulu and YouTube are now delivering live TV channels over the internet at reasonable prices—including sports properties that were previously available only through traditional distribution.”

As we've long noted, it wouldn't be particularly hard to nip this entire revolution in the bud. Entrenched cable providers simply have to shore up their abysmal customer service and lower rates for legacy TV. And while a few cable and broadcast executives are finally starting to get it, most would rather double down on lip service, bad ideas and price hikes in the false belief they get to nurse the dying cable cash cow in perpetuity.

Filed Under: cable, cord cutting, internet, tv

Tech Journalists Keep Completely Missing The Point Of Cord Cutting

from the buy-ALL-the-things! dept

It has become the laziest "hot take" in technology media. Once a month or so, a writer decides to subscribe to as many streaming video services as possible. They then proudly declare that this whole cord cutting thing (ditching traditional cable TV for streaming video) is a waste of time. Why? For whatever reason, these writers feel compelled to try and use streaming alternatives to perfectly mirror the existing, bloated cable bundle consumers have spent two decades complaining about, only to shockingly wind up disappointed by the cost (gosh, it's almost as if broadcasters dictate the pricing for both services!).

Each time one of these stories pops up (from Gizmodo to USAToday,) we note how these writers are completely missing the point. Cord cutters aren't trying to precisely mirror traditional cable bundle, they're simply looking for greater flexibility. Cord cutting provides just that, in that if you don't like sports -- for example -- you don't have to subscribe to any services that offer it. As such, "cord cutting is really expensive when I subscribe to every streaming service in the known universe" is just an odd narrative that just keeps bubbling up across various media outlets despite not really making much sense.

The latest culprit is the New York Post, which recently penned a missive declaring that "streaming TV is getting as bad as cable." Why? Again, it's apparently because when you sign up for every streaming service imaginable, it starts to get somewhat expensive:

"Home entertainment is really starting to add up. Want to watch “The Crown,” “The Handmaid’s Tale,” “Transparent,” “Game of Thrones” and “Homeland”? Prepare to drop $51 a month — minimum. And that number doesn’t even include your Internet package or basic options such as Food Network, Travel Channel and Syfy.

And just when we thought we’d reached maximum capacity, in September, CBS will resurrect “Star Trek” for a new series called “Discovery.” Fans rejoiced at the announcement — they’d been without a “Trek” series for 12 years — until they made a rude discovery of their own: The new show would only be available on the CBS All Access app. That’s $5.99 a month to basically watch one show. Absolutely nobody is signing up for the “NCIS” reruns. So now we’re at $57 a month.

So, several things. One, $57 a month is still significantly less money that what many people pay for cable. Two, writers like this ignore a number of obvious realities that can lower your costs further, including the fact that countless people share streaming service passwords (something most streaming companies don't care about because they see it as free advertising). You also need to factor in things like over the air antennas (and the rising number of solutions that let you record this content to DVR), which provide additional options for less money -- or free.

Writers like this also hysterically like to avoid so much as mentioning piracy. Too many writers bizarrely act as if you're not allowed to even acknowledge piracy exists because it's naughty. But if you're "analyzing" how much it costs for an ordinary consumer to get TV content and you're not factoring in piracy, you're missing a fairly massive part of the overall picture. It doesn't really matter if you or your publisher don't like it, or don't think people should be doing it. It's happening, it's part of the overall cost-saving picture, and it's something companies have to compete with. Yet it's never even mentioned in these reports.

That said, journalists pushing the "if I buy everything in the store it gets expensive" narrative are missing the most important point: actual consumers repeatedly say cord cutting saves them significant sums of money each and every month. And if any of these writers had actually bothered to, say, talk to actual cord cutters, they would tell them the same thing.

Every time a story like this pops up I enjoy heading over to Reddit where users quickly point out how cord cutting is saving them plenty of money. Why? Because it provides something most traditional cable providers aren't willing to: flexibility and choice. With cord cutting, the end user gets to decide how to best balance their viewing options to build a content package that works for them and their budget. That's in contrast to your cable provider, who'll consistently pay empty lip service to choice and flexibility, right before it raises both your cable bill and set top box rental fee.

Yet somehow the reality that consumers are truly saving money escapes these pearl-clutching authors. Like in this recent story at Wired pushing the same, stale narrative. One user at Reddit put their objection to these reports rather succinctly:

"I don't know why every article like this dives into recreating cable, and then laments that it's not that much cheaper than cable. He's way more concerned with watching channels than watching shows or entertainment."

Look, if you really like paying a significant sum of money for 500 channels to a company with a worse customer service rating than the IRS nobody's stopping you. In fact, if you truly need to access every shred of programming imaginable and have oodles of disposable income, cable remains your best bet. But the idea that cord cutting is somehow "failing" just because it's not good at mirroring the abysmal value presented by the traditional cable bundle makes no coherent sense. At the very least, the next time you proudly declare that cord cutting doesn't save consumers money -- perhaps talk to some actual consumers first?

Filed Under: cable, cord cutting, television

Cable's New Brilliant Idea: Charging You More Money To Skip Ads

from the same-shit,-more-money dept

We've noted for years how cable executives facing market (r)evolution just can't stop making bone-headed decisions. As cord cutting accelerates and ratings take a dive, many cable and broadcast executives have decided the solution is to stuff more ads than ever into every viewing hour, in some instances actually editing down or speeding up programs so the additional ad load will fit. That's of course when they're not busy trying to prevent users from using modern technologies like DVR ad skipping, relentlessly raising cable rates and perpetuating some of the worst customer service in America.

Quite often, cable executives try to obscure the sector's dysfunction by pretending to be innovative, and hoping nobody can tell the difference. The latest case in point: FX Networks has struck a new deal with Comcast that lets viewers avoid ads on some FX programs -- if they're willing to pay another $6 per month:

"For an extra $5.99 a month, Comcast Xfinity customers will be able to receive the FX+ video-on-demand platform with up-to-date episodes of FX’s original programming, including “American Horror Story,” “Fargo,” “The Americans,” FXX’s “It’s Always Sunny in Philadelphia” and older FX titles such as “The Shield” and “Nip/Tuck.”

“This initiative represents the first of its kind for an ad-supported cable network, and begins to put us on equal footing with premium networks and streaming services,” John Landgraf, chief executive of FX Networks, said in a statement.

There's several problems with this "premium," Comcast-exclusive effort. One, users are incredibly fed up with paying too much money for bloated bundles of channels they don't want, and raising prices in any fashion at this juncture is simply a bad idea. Two, these Comcast customers can already skip advertisements on FX programming by using a DVR, making paying an additional fee to do the same thing uninspiring. There's also a notable caveat with this effort: the ad-skipping only works on some FX programs, namely the ones the channel hasn't already licensed out to other streaming competitors like Amazon, Hulu and Netflix.

AMC Networks offered a similar initiative last month, also letting Comcast customers pay even more money to do something they can already do. In some instances these are broadcaster efforts to set the stage for their own more fully-functional streaming services in line with Netflix or Amazon. But every channel from FX to AMC having their own streaming service presents its own problem: namely one of fractured exclusivity. Or, a world where you have to subscribe to a litany of multiple, costly services just to get access to your favorite programs.

On the surface these efforts are designed to give the impression that the cable and broadcast industry are rolling with the punches and adapting to the streaming video era. But the act of charging more money to do something users can already do, combined with raising rates at time when cord cutting is accelerating only really accomplishes one thing: drive users back to piracy where avoiding ever-growing ad loads can be avoided entirely, for free.

Filed Under: ad skipping, cable, fees, tv
Companies: comcast

Cable Lobbyists Try To Scuttle State Inquiries Into Shitty Broadband Service, Slow Speeds

from the do-not-pass-go,-do-not-collect-$200 dept

Whether it's rolling back already agreed upon merger conditions, killing net neutrality, or eliminating broadband privacy protections, giant ISP lobbyists are having a field day under the Trump administration, slowly but surely stripping away oversight of one of the least competitive -- and most anti-competitive -- sectors in American industry. We've noted repeatedly that as giant cable providers like Comcast nab an ever larger monopoly over next-gen broadband services, the end result of this myopic pursuit will be even higher rates -- and even worse customer service -- for everyone.

But there's a problem in this quest to create a new, golden era of telecom sector monopoly dysfunction: individual states.

In the wake of the attack on the FCC privacy rules, more than a dozen states have rushed to enact new privacy protections for consumers, requiring that ISPs are very clear about what data they're collecting and who they're selling it to. And in the wake of federal apathy to consumer complaints about some of the worst customer service in any industry, individual states have also started pushing back, as evidenced by New York Attorney General Eric Schneiderman's lawsuit against Charter Communications for advertising speeds company execs knew they couldn't deliver.

Ironically, cable lobbyists (and the politicians, sock puppets, think tankers and policy wonks paid to love them) have quickly rushed to defend "states' rights!" when it comes to giant ISPs' ability to write protectionist state laws that hamper broadband competition. But now that several states are actually passing legislation that might help consumers, the broadband industry and current FCC have launched a concerted effort to keep states from meddling in their attempts to build utterly-unaccountable media, advertising, broadband and television conglomerates.

Case in point: the FCC is already making noise about their plans to somehow prevent states from passing consumer broadband privacy laws. And last week, cable industry lobbyists began petitioning the FCC in the hopes of making it much more difficult for states to investigate claims of substandard broadband service and speeds, allowing them to hide behind the "up to" marketing language most of us are familiar with:

"NCTA-The Internet & Television Association and USTelecom, lobby groups for the cable and telecom industries, last month petitioned the Federal Communications Commission for a declaratory ruling that would help ISPs defend themselves against state-level investigations. The FCC should declare that advertisements of speeds "up to" a certain level of megabits per second are consistent with federal law as long as ISPs meet their disclosure obligations under the net neutrality rules, the groups said. There should be a national standard enforced by the FCC instead of a state-by-state "patchwork of inconsistent requirements," they argue.

While there are valid concerns that individual state requirements could make life more complicated for large ISPs, ignored by the NCTA is the fact that their efforts to gut meaningful federal oversight of telecom providers is the primary reason that's happening in the first place. And a bipartisan filing by 34 state attorneys general (pdf) points out that this effort has nothing to do with wanting to avoid "inconsistent requirements," and everything to do with wanting to dodge accountability for poor service on both the state and federal level:

"[I]t appears that the petition is really seeking to alter disclosure obligations under state law, including state consumer protection laws’ prohibitions on false and misleading statements and material omissions in consumer-facing advertisements," they wrote. "Such a ruling would plainly exceed the scope of the Commission’s authority granted by Congress, and would be improper." There is also "no factual basis" to determine that ISPs' speed disclosures meet the FCC's "just and reasonable" standard, they argued. "The request is plainly seeking a factual finding, despite the complete lack of any factual record to support such a conclusion," they wrote."

It's worth reiterating: when states have come under fire for letting ISP lobbyists directly write horrible protectionist legislation that hamstrings local community rights and hinders broadband competition, cable lobbyists are quick to rush to the defense of state rights. When those states actually try to hold these same broadband providers accountable for substandard service courtesy of a lack of competition, it's suddenly all a bridge too far. Meanwhile, those that still believe that blindly deregulating the telecom market will somehow magically make Comcast behave, are in for a nasty surprise over the next decade.

Again, deregulation can help competitive markets thrive. But the telecom sector, as we've long illustrated, is neither competitive nor that simple. In fact, earlier efforts to blindly deregulate an uncompetitive, utterly-dysfunctional, taxpayer-subsidized broadband industry is the precise reason most of you are currently stuck on hold with Comcast in the first place. And the sooner we collectively realize that giving some of the least ethical companies in America carte blanche doesn't magically result in connectivity Utopia, the sooner the quest for cheaper, better, and more broadly-available broadband will be fulfilled.

Filed Under: broadband, cable, customer service, fcc, investigations, service, states, states rights
Companies: ncta

80% Of Cord Cutters Leave Because Of High Cable TV Prices, But The Industry Still Refuses To Compete On Price

from the it's-not-a-problem-if-we-ignore-it,-right? dept

A new study from Tivo (pdf) notes that nearly half of current pay TV subscribers are considering cutting the cord this year. That's not particularly surprising given the fact that the first quarter set cord cutting records, and the second quarter is expected to be significantly worse. Similarly unsurprising is the fact that of these defecting customers, roughly 80% of those departing say they're doing so because traditional cable TV service is simply too expensive:

37.1% of respondents spent at least $101 per month on cable TV, with some spending upwards of $150 per month, with trends only aiming higher. While cable providers often pay ample lip service to "providing value," the entire cable and broadcast sector continues to believe that it can simply refuse to compete on price with a growing roster of streaming competitors now arriving at the gates of their beloved cash cow.

Case in point is Charter Communications, which after a recent acquisition spree has been raising TV rates upwards of 40% despite the supposed bump in competition. Charter CEO Tom Rutledge, who was deemed to be the highest paid executive in the United States last year at $98 million, has insisted that these customers were simply "mispriced" under previous ownership and needed to be nudged in the "right direction" (read: paying even more money for the same service they already thought was too expensive):

"It’s a difficult thing to model. But we’re coming at it both ways, both from creating a value proposition in the pricing and packaging we have, and doing those smart things that you can do with an existing customer base that’s been mispriced to move them in the right direction."

That's gibberish, and shockingly, this kind of tone deafness to the overall trajectory of the cable sector is only causing a spike in cable TV defections at the company, which lost more than 100,000 cable TV subscribers last quarter. Tivo makes it clear that the cable industry can't continue the ongoing head-in-the-sand approach to dealing with the rise of cord cutting and streaming competition:

When the increase in monthly bills is coupled with the fact that 81.4% of unsatisfied respondents selected “Too expensive/increase fees for cable/satellite service,” it becomes evident that something must be done about this group. With more options than ever for TV in 2017, consumers continue to get smarter about their TV options, and many have discovered ways to access TV for far less than $100 a month. Skinny buddle offerings have increased, too, and options include Dish Networks’ SlingTV, DIRECTV NOW and Sony’s PlayStation Vue.

Instead of competing on price and package flexibility, most large cable companies (like Comcast) have responded to cord cutting by not only raising TV rates, but ramping up deployment of arbitrary and unnecessary broadband usage caps and "overage fees", allowing them to counter any lost TV revenues with broadband price hikes, and punish folks looking to wander away from Comcast's own TV walled garden. But Charter is prohibited from using caps for another six years as a condition of its recent megamerger, conditions the FCC has started to slowly but surely nibble away at.

Still, the cable industry has at least progressed in one meaningful metric: a few years ago it denied any of this was happening whatsoever.

Filed Under: cable, cable tv, competition, cord cutting, fees, high prices, tv

Cable Industry Lobbyist Proclaims Cable TV Industry 'Failing' While Advocating Against Broadband Consumer Rights

from the sigh dept

I'll forgive our dear readers if they don't have the name Matthew Polka floating in their memories right at this moment. As a refresher, he's the CEO of American Cable Association, the lobbying group that represents smaller cable and broadband providers. One would think that a group like this would be very interested in breaking up the near-monopolies held by the larger players in this industry and fostering more competition within the marketplace, except that Polka has literally said the opposite. The ACA has also been involved in battles against any sort of regulation in the broadband industry, against privacy rules with any real teeth, and against the plan to require cable companies to open service to third-party cable boxes.

And in some respects on those last points, I get it. Hey, the ACA is lobbying for its member clients, not for the American people. Even as Polka has made noise about how great non-competition would be for America, everyone knew that was silly. What he says is clearly crafted to make his cable company clients as happy as possible, obviously.

The cable TV business is in trouble—in fact, it is "failing" as a business due to rising programming costs and consumers switching from traditional TV subscriptions to online video streaming, according to a cable lobbyist group.

"As a business, it is failing," said Matthew Polka, CEO of the American Cable Association (ACA). "It is very, very difficult for a cable operator in many cases to even break even on the cable side of the business, which is why broadband is so important, giving consumers more of a choice that we can't give them on cable [TV]."

Well, that's certainly different. These comments by Polka about how the cable television industry is failing differ from the doom-and-gloom sideshow too often pitched as a reason for cable companies to not do all sorts of things that would benefit customers. Instead, Polka's tone appears to be sincere on this point: the cable television industry, as we have come to know it, is in its death throes. Given cord-cutting and a new customer adoption rate that has been falling in the younger generations, it's refreshing to hear a cable lobbyist come out and admit all of this.

The problem is that when you square this with the other point he made -- the importance of broadband -- a shiver bolts down the spine.

That's one reason cable companies in the ACA see broadband as "their future," Polka said. A cable company executive who appeared alongside Polka on the C-SPAN show echoed those comments.

Video is "certainly our worst product," said Tom Larsen, senior VP of government and public relations for cable company Mediacom. "It makes the least amount of money."

Larsen and Polka both praised the FCC's new Republican leadership for taking a deregulatory approach to broadband.

This, of course, refers in part to the gutting of net neutrality, the death of which is being to served to the American public by the same new leadership Polka is so happy to praise. It should be immediately clear what the ACA is hoping for when you take into account the sum of its previous stances, nearly all of which have been de facto anti-competition, as well as this newfound full focus on the broadband portion of its members' services. It expects to be able to strangle the ISP industry in the same way its anti-competitive practices helped pave the way for cable providers being unable to respond to customer demands.

Filed Under: broadband, cable, competition, consumer rights, tv
Companies: aca

TV Cord Cutting Poised To Smash Records During Second Quarter

from the inevitable-(r)evolution dept

So we've already noted that with the rise of streaming video competition, more people cut the TV cord last year than any other time in history. MoffettNathanson analyst Craig Moffett has noted that 2016's 1.7% decline in traditional cable TV viewers was the biggest cord cutting acceleration on record. SNL Kagan agrees, noting that traditional pay TV providers lost around 1.9 million traditional cable subscribers. That was notably worse than the 1.1 million net subscriber loss seen last year. And once you factor in the fact that people are buying and moving to new homes without signing up for cable, the full numbers are actually worse.

And things are only going to accelerate as companies like Dish (Sling TV), Sony (Playstation Vue), Google (YouTube TV), Amazon and others flood the market with cheaper, more flexible, streaming alternatives.

Pay TV providers already lost roughly 789,000 subscribers this year. Wall Street analysts expect the second quarter to see more than 1 million subscriber defections away from cable. The second quarter is already historically the worst of the year for cord cutting, as college students cancel school service and pad the defections. This year, however, the belated rise in real streaming competition means things will be arguably worse:

"Pay TV providers could lose more than a million subscribers in the current period, a team of analysts at UBS led by John C. Hodulik wrote in a research note distributed Tuesday. "That would be the worst result on record and equate to a 2.5% annual decline," compared to 2.1% last quarter, the analysts wrote.

And things for the industry could only get worse, the analysts wrote.

"We estimate this will put the industry on pace for a 3.3% decline in 2017 and 4.0% in 2018," they said in their note.

You might just notice a bit of a trend after UBS put its estimates into visual form:

As we've long noted, none of this will be fatal for industry giants like Comcast, who plan to counter lost TV revenues by jacking up broadband prices via arbitrary and otherwise unnecessary usage caps, using bundled pricing to force people to take TV bundles they may not even want. The broadcast and cable TV sector could also easily counter these losses by doing something uncharacteristic and unthinkable for the sector: listening to these defecting customers and actually competing on price and package flexibility.

Filed Under: cable, cord cutting, tv

Cord Cutting Is Very Real, And 25% Of Americans Won't Subscribe To Traditional Cable By Next Year

from the head-buried-firmly-in-the-sand dept

For years the traditional cable and broadcast industry has gone to great lengths to deny that cord cutting (getting rid of traditional cable TV) is real. First, we were told repeatedly that the phenomenon wasn't happening at all. Next, the industry acknowledged that sure -- a handful of people were ditching cable, but it didn't matter because the people doing so were losers living in their mom's basement. Then, we were told that cord cutting was real, but was only a minor phenomenon that would go away once Millennials started procreating.

Of course none of these talking points were true, but they helped cement a common belief among older cable and broadcast executives that the transformative shift to streaming video could be easily solved by doubling down on bad ideas. More price increases, more advertisements stuffed into each minute, more hubris, and more denial. Blindness to justify the milking of a dying cash cow instead of adapting.

But given the numbers we've seen over the last year or two, even the cable and broadcast industry has had to scale back its "head firmly in the sand" approach to market evolution. Last month MoffettNathanson analyst Craig Moffett, the telecom industry's top media quote machine, pointed out that 2016's 1.7% decline in traditional cable TV viewers was the biggest cord cutting acceleration on record. Kagan agreed, a recent report indicating that Pay TV providers lost around 1.9 million subscribers last year, the firm predicting a notable spike in the number of broadband-only homes:

"At the same time, American broadband-only homes grew much faster in 2016 — increasing by more than 2 million. Kagan estimated the U.S. had 15.4 million non-multichannel broadband homes at the end of last year, up from 13.3 million end of 2015. That suggest that 13% of the country’s occupied households make the decision not to take a traditional multichannel TV package."

Another new report by Convergence Research predicts that this broadband-only trend will only continue:

"US TV subscriber losses and cord cutter/never household additions saw a major increase in 2016 as compared to 2015: We estimate 2016 saw a decline of 2.05 million US TV subscribers, 2015 saw a decline of 1.16 million, and forecast a decline of 2.11 million TV subscribers for 2017...As of YE2016 we estimate 27.2 million US households (22.3% of HHs) did not have a traditional TV subscription with a Cable, Satellite, or Telco TV access provider, up from 24.2 million (20% of HHs) YE2015, and we forecast 30.3 million (24.6% of HHs) YE2017. 2015 saw 2.1 million, 2016 3 million, and we forecast 3.1 million 2017 cord cutter/never household additions.

The shorter version: by next year, one quarter of Americans will no longer subscribe to traditional cable. And that's only going to accelerate as cheaper, better, streaming alternatives emerge.

In a functioning, healthy market, these companies would see the writing on the wall and adapt, benefiting users. And to be fair, some have tried (Dish's Sling TV, AT&T's DirecTV Now). But with the cable industry's growing monopoly over broadband, a return to rubber-stamp regulation, and the looming death of net neutrality, many of these companies correctly understand they won't have to seriously compete anytime soon. They can simply impose unnecessary usage caps and overage fees on uncompetitive broadband markets, then use zero rating to give their own services a leg up -- while penalizing competitors.

Unfortunately for them, even that likely won't "solve" the tectonic evolution that's only just starting to take place. Ultimately, denial-prone cable and broadcast executives will be left with just one, unthinkable option: actually competing on cable TV price, flexibility and quality.

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

The Cord Cutting The Cable Industry Says Isn't Happening, Keeps Happening

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

For years, we've noted how many cable and broadcast executives have decided that their best reaction to the growing threat of cord cutting is to bury their head in the sand and pretend it isn't happening. Some industry executives like to insist that cord cutting remains an unimportant trend that will magically disappear once more Millennials begin procreating. Others -- often with help from the press -- like to insist the idea of cord cutting is some kind of myth perpetrated by mean bloggers, just to ruin everybody's good time.

As a result, too many in the cable and broadcast industry have decided that the best response to a changing TV marketplace is more of the same: more rate hikes, more advertisements, more tone deafness, and more denial.

You may be shocked to realize that this isn't working. In fact, MoffettNathanson analyst Craig Moffett, the telecom industry's top media quote machine, pointed out this week that 2016's 1.7% decline in traditional cable TV viewers was the biggest cord cutting acceleration on record thus far:

"With the results now in from all of the largest operators, it is clear that cord-cutting of legacy distribution services—that is, without including OTT-delivered virtual MVPD bundles like Sling TV and DirecTV Now (and soon, YouTube TV)—has at last meaningfully accelerated,” Moffett said. “While there admittedly remain a few smaller operators left to report, the pay-TV business (as defined by traditional providers) ended 2016 shrinking at 1.7% per year, its fastest quarterly acceleration on record."

Companies like AT&T and DirecTV have "solved" the problem of cord cutting by rolling subscribers of their streaming TV services (DirecTV Now and Sling TV) into their TV subscriber totals, hoping you'll ignore that these users pay significantly less for service than their traditional TV counterparts. Other companies, like Comcast, have actually managed to eke out small quarterly gains in cable TV customers by leveraging their broadband monopoly and effectively giving TV services away on promotion -- a short-term fix.

But the train is rolling all the same. ESPN, the poster child of industry cord cutting denial, only just recently acknowledged it will finally crack and offer the kind of stand alone streaming services it spent years claiming weren't viable. The company's also gearing up for a new round of layoffs to help counter the millions of lost subscribers (due to cord cutting and the rise of pared-down "skinny bundles"). It's estimated that, at this juncture, ESPN's losing around 10,000 subscribers per day -- the lion's share of which are paying too much money for content they don't watch.

As always, you'll have a good idea that the era of cord cutting denial is over when cable providers truly begin competing on price when it comes to their traditional cable TV offerings. Right now, however, the overarching name of the game for the sector is to insist that this cataclysmic shift the industry is experiencing is just a temporary phenomenon that needs riding out -- and not, as the truth should make clear, genuine adaptation.

Filed Under: cable, cord cutting, internet, tv

How Comcast's Growing Broadband Monopoly Is Helping It Temporarily Fend Off The TV Cord Cutting Threat

from the innovation-through-monopoly dept

Comcast's earnings report this week indicated that the company managed to add 80,000 basic video subscribers during the fourth quarter, and 161,000 net video customers for the full year. And while news outlets were quick to proclaim that Comcast had magically bucked the cord cutting trend, you'd be hard pressed to find a single outlet that could be bothered to actually explain how. When an explanation is given, it's usually just regurgitation of Comcast's claim that the cable giant's fending off cord cutting thanks to the company's incredible innovation in the set top box market:

"The turnaround in the cable business helped Comcast beat profit estimates for the fourth quarter. Executives attribute the momentum in their cable-TV business largely to their new video platform, called X1, which makes it easier to search for shows and movies on TV and on Netflix from their cable set-top box."

Except it's not cable box innovation that's helping Comcast fend off cord cutting, it's the company's growing monopoly over the broadband last mile.

In countless markets Comcast competes solely with AT&T and Verizon, who have made it abundantly clear they're no longer interested in the fixed-line residential broadband business. Both companies have made slinging ads and content at Millennials their primary focus, as evident by Verizon's acquisition of AOL and Yahoo and focus on creative new snoopvertising technologies. As a result, these telcos are quite literally trying to drive many of these customers away with a combination of apathy and price hikes. If these users want broadband connections any faster than 3-6 Mbps, their only option is, increasingly, Comcast.

When these users arrive at the nation's biggest cable giant, they discover that signing up for TV and broadband is notably cheaper than just signing up for broadband alone. The problem is: while many have claimed that Comcast's "bucking cord cutting," there's no evidence that many of these users are even watching the cable connections they pay for, nor that they'll stick around as a traditional television viewer long term. Many just signed up because having television was actually less expensive than getting rid of it.

But should they try and get rid of it Comcast's got that angle covered too: the company's growing monopoly means less broadband competition than ever in many of its markets, allowing it to impose draconian and unnecessary usage caps on the company's customers. Caps that apply to competing streaming services, but not Comcast's own content. All told, between bundling and usage caps, Comcast's broadband monopoly means it simply doesn't feel the pain a company would feel in the face of real competition, which is why it has little to no incentive to fix its historically bad customer service.

Often Comcast obfuscates its growing monopoly over broadband and its ham-fisted implementation of usage caps with creative claims of incredible new innovation that gets gobbled up by the press. Like the company's announcement this week that it will soon be letting customers watch Comcast cable TV on Roku devices. This new beta is Comcast's attempt to quiet criticism that emerged during the FCC's failed attempt to bring competition to the monopolized cable box. And, in obedient fashion, the press was quick to highlight the partnership as a surefire example of Comcast's incredible innovation.

But upon closer inspection the service comes with a number of caveats, including the fact that users must subscribe to Comcast cable TV and Comcast broadband, and must pay Comcast an extra fee just to use Roku hardware they already own. Also buried in the FAQ for Comcast's new Roku beta is the proclamation that this service also won't count against Comcast's usage caps:

"Will the XFINITY TV Beta app use data from my XFINITY Internet Data Usage Plan?

No. The XFINITY TV service delivered through the XFINITY TV Beta app is not an Internet service and does not touch or use the Internet. Rather, it is a Title VI cable service delivered solely over Comcast's private, managed cable network, so it will not count toward your XFINITY Internet Data Usage Plan. Usage of any other apps on Roku devices, including any TV Everywhere apps accessible with your XFINITY TV credentials, do use the Internet and will count against your XFINITY Internet Data Usage Plan.

Comcast is effectively arguing that this isn't a net neutrality violation (for whatever that's worth with the rules about to be deep sixed by a duopoly-adoring Congress) because the data doesn't travel over the common internet. Still, the function of these added restrictions cumulatively remains the same: to tilt the playing field and keep customers in house and away from competing services. With a growing cable monopoly and the rise of rubber-stamping regulators under Trump, Comcast will soon face less pressure than ever before to shore up its miserable customer service or to lower prices.

That's great news if you're a Comcast executive or investor, but less stellar if you're one of the countless millions of consumers or competitors already bored to tears by several decades of Comcast's anti-competitive behavior and overall dysfunction.

Filed Under: cable, cord cutting, monopoly, tv
Companies: comcast