TV 'Cord Cutters' Will Be The Majority By 2022

from the from-fringe-to-mainstream dept

The broadcast and TV sector spent the last fifteen years trying to claim that TV cord cutting (cancelling traditional TV and going with streaming or antenna broadcasts) wasn't a real thing, or that it was only something done by losers. But it's the cord cutters who'll be getting the last laugh.

A new study (pdf) by the Convergence Research Group indicates that cord cutting, once denied to exist at all by the cable TV sector, is about to get even hotter. According to the report, 36% of US homes didn't pay for "traditional" cable TV at the end of a particularly bloody year for the pay TV sector. The group estimates that total will grow to 42% of US households in 2020, and finally topple into a majority of consumers (54%) by 2022. That in turn is contributing to a notable drop in revenue from the major cable TV providers, down from $100 billion in 2019 to a predicted $94.8 billion this year.

If you're worried about major giants like Comcast, AT&T and Verizon struggling, you shouldn't. While their video profits will erode, their monopoly over broadband means they'll simply be recouping that lost revenue by jacking up the price of your broadband connection (including usage caps and overage fees) in the massive number of uncompetitive US broadband markets:

"Being caught in the programmer versus independent OTT squeeze play hampers TV access provider revenue & margins, however as TV access providers are also Internet providers there are also benefits to facilitating the rise of OTT. Annual residential broadband revenue has more than doubled over the last decade & we forecast 2022 residential broadband access revenue will X with 2022 TV access revenue. Residential broadband subs surpassed TV subs in 2017."

Another report by Trade Desk suggests that the pandemic will only accelerate the trend. In large part because one of the last major reasons people cling to fat, over-priced cable TV bundles (sports) are on hold for the foreseeable future:

"The company found that 64% of Americans have either cut the cord, are planning to drop their pay-TV subscriptions, or never subscribed in the first place. Of those households that do still have cable TV subscriptions, 11% plan to cut the cord by the end of the year. Trade Desk surveyed 2,600 Americans for the study."

“With only a quarter of young professionals having any long-term interest in traditional cable TV, in a few years we won’t be talking about linear or cable TV at all. It will all be online and streaming,” said Brian Stempeck, Chief Strategy Officer, The Trade Desk. “For broadcasters and advertisers, it’s now all about how quickly they can pivot to where the eyeballs are moving and many of them are already investing heavily in order to succeed in a world of connected TV.”

It's not like the TV and broadcast sector didn't have the better part of the last decade to prepare for this trend. But with the exception of a few companies most in the sector just keep pretending this trend didn't exist, cozy and warm in their bogus belief that traditional TV would be a cash cow they could happily nurse for all eternity without ever having to innovate or (gasp) compete on price.

Filed Under: cord cutters, predictions, tv

Cable's Answer To A Changing TV Landscape? Stuff More Ads Into Every Hour

from the dancing-in-quicksand dept

As we've been covering, the cable and broadcast industry's response to the shift toward Internet video appears to be a three-staged affair. Stage one was largely denial, with cable and broadcast executives either mocking (or denying the existence of) cord cutters, while going out of their way to try and ignore any data disproving their beliefs. Stage two is a one-two punch of desperately trying to milk a dying cash cow (like endless price hikes) while pretending to be innovative by offering largely uninteresting walled-garden services like TV Everywhere.

I'll get to stage three later, but here in stage two, the industry remains very focused on doubling down on very bad ideas in the hopes an increasingly annoyed customer base won't notice. As we've been noting, the viewership for both cable and broadcast TV is dropping, particularly in segments like kids programming, where parents are finding better value (and fewer ads) via services like Netflix. What's cable's response to this growing threat? Start shoving more and more ads into each viewing hour:

"Beset by declines in audience, a majority of U.S. cable networks stuffed more commercials onto their air in the fourth quarter, with Viacom boosting its ad load by 13% across its cable networks; A+E Networks increasing the number of commercials it runs by 10%; and Discovery Communications adding 9% more TV spots, according to research released Wednesday by independent analyst Michael Nathanson. On the broadcast side, Fox raised the number of spots it aired by 15% in the quarter, Nathanson said, while ABC and CBS reduced theirs by 2% and NBC cut its by 6%."

Of course, cable and broadcast companies can get away with this because -- despite all the grumbling about cable companies -- the vast majority of consumers continue to pay an arm and a leg for vast bundles of cable content that they barely watch. By the time the numbers start to veer more sharply toward cord-cutting, many of these cable, phone or telco TV operators are going to be well behind the Netflix and Amazon eight ball. That will bring us to phase three, where cable and broadcast companies that refused to adapt will turn to their stranglehold over the broadband last mile, and start extracting their pound of flesh via usage caps.

Filed Under: ads, cable, cord cutters, tv

Pace Of Cord Cutting Continues To Quicken

from the ramping-up dept

While we've discussed cord cutting before, it seems like the entertainment industry has been slow to respond to it. It was only recently that Nielson seemed to acknowledge its occurrence, for instance, and even once television stations faced the facts and attempted to embrace internet streaming, they did so with the kind of guile and tact you'd expect out of a drunken giraffe. Lots of time delays, restrictions, and barriers to entry that will turn away the kind of person who is likely a cord-cutter. In other words, they're doing it wrong.

And they had better start learning to do it right, because the pace of cord cutting is ramping up. This from Moffett Research's Craig Moffett, former offerer of terrible broadband infrastructure advice and someone who previously indicated that cord cutters were "poor nobodies."

Moffett Research founder and analyst Craig Moffett said mid-day Tuesday that evidence of cord cutting has become more apparent in the latest set of figures...For the second quarter, publicly traded pay TV companies recorded a combined video subscriber decline of 380,000, "about the same as last year," Moffett said. "Household formation, however, was better than a year ago, meaning that the change in pay TV penetration was worse."

In other words, the pool of potential customers has risen with no correlative rise in subscribers. That's an indication that more households are foregoing cable television entirely and, what with the ever-growing interest in entertainment from the public, that had better represent a huge concern for the industry. Television providers have done a horrible job of making their content available in the way customers want it, when the customers want it, and they result has been a declining subscriber base.

What's more, the crowning jewel that keeps much of that pay-TV revenue coming in has been live sports entertainment and if you look at the flagship station for that kind of thing, ESPN, the ratings hits have been massive. Couple that with a clearly stated goal by Google and others to expand sports streaming over the internet and you have a recipe for the decimation of cable TV.

All this, rather than giving customers what they want, how they want it, and when they want it -- and, hey, welcome to the reality party, Craig! Why don't you stick around awhile this time?

Filed Under: broadband, cable, cord cutters, cord cutting, craig moffet, tv

Hulu Puts Gun To Own Head: May Require Users To Show Proof Of Pay TV Subscription

from the preserving-the-problem-to-which-they-are-the-solution dept

We've discussed in the past how Hulu's owners -- the major Hollywood/TV studios -- absolutely hate that Hulu is actually useful and convincing people to watch TV online. Because of that, they've been trying to destroy Hulu. Hulu's management -- which mostly seems to understand the internet -- tried to get out from under this potentially paralyzing ownership structure, but the studios (stupidly) telegraphed the message that they would block Hulu from getting their content, meaning that no one wanted to pay the ridiculous asking price.

Well, now it appears that phase one of making Hulu absolutely useless to people who might cut the cord from pay TV is going into effect, with plans to join the networks silly "TV Everywhere" setup and require users to have a pay TV subscription in order to access parts of the service. Hulu's main (non-studio) investor, Providence Equity Partners, sold its shares last week because it heard about this plan and knew it was suicidal.

In no rational world would Hulu move in this direction on its own. Hulu's key selling point is that it's the go-to source for cord cutters, helping it build up a very large audience. Taking that crowd out of its audience makes it close to useless. While the studios love this because they make so much money from pay TV companies, it's incredibly short-sighted in the long run. It's pure protectionism of legacy revenues, done by sacrificing the one truly innovative platform they've invested in.

Meanwhile, along the same lines, the THResq story that we link to above also notes that NBC Universal will, once again, seek to marginalize its own online coverage of the Olympics, by also requiring proof of a pay TV service. Way to raise a giant middle finger to all the cord cutters out there -- guaranteeing that they seek out alternative streams for which NBC Universal gets no money.

Filed Under: cord cutters, hollywood, pay tv, television
Companies: hulu, providence equity partners

Turns Out TV Cord Cutters Are, In Fact, Young, Educated And Employed

from the ain't-the-economy dept

So you remember how the cable folks were saying that all those people ditching cable TV were doing it because of the bad economy, and rather than young, tech-savvy early adopters -- they were old poor folks living on dog food? Yeah, so it turns out: not so much. A new study shows that they actually tend to be younger, well-educated, fully-employed and make a decent amount of money. Can't wait to see how the TV folks talk themselves out of this one...

Filed Under: cable, cord cutters, internet, tv

New Cable Talking Point Against Cord Cutters: They May Be Cutting, But They're Poor Nobodies

from the nice-try dept

We already noted that the cable industry is really trying to stick its head as far in the sand as possible when it comes to the fact that many customers are starting to drop their cable TV subscriptions. First, they pretended it wasn't happening at all, and that they had somehow "beat" the internet (based on a single anecdote of someone who had dropped cable, but gone back to it a year later). Then, when news came out of massive numbers of people dropping their cable TV plans, they said that they weren't really cord cutters, because they were only canceling service due to the down economy. The latest strategy appears to be to insult the cord cutters, saying that while the idea behind cord cutters was that it would be young, technologically savvy folks, it's actually people who the cable companies just don't care about: poor older folks. Seriously. At least that's the argument being made by one of the cable industry's favorite talking heads, who tries to minimize the cord cutters by saying they're "poor" people who "eat a dog's breakfast."

Mr. Moffett said the image of the cord-cutter had been that of a "cutting-edge technologist" who preferred to bypass cable to watch programming on computers and on an ever-proliferating array of devices. "The reality is it's someone who's 40 years old and poor and settling for a dog's breakfast of Netflix and short-form video."

Sounds kind of like the cable industry is moving from the "denial" stage to the "anger" stage of grief...

Filed Under: cable, cord cutters, craig moffett, tv

Comcast Pretends That Cord Cutters Aren't Cord Cutters If They Cut Cord Because Of The Economy

from the denial-is-a-channel-on-the-internet dept

A couple of months back, we noted that the TV companies were in complete denial, insisting that the idea that people would cut the cable cord to go internet-only would never happen. However, we noted with amusement that the same day, that article came out so did a report saying that cable TV had suffered its first ever decline in subscribers. It seems that's continuing. Comcast apparently lost 275,000 video subscribers in the third quarter. However, the company has an ingenious way to make it clear that those people aren't cord cutters. Why not? Because they're saying they canceled their accounts due to the economy:

Comcast lost 275,000 cable subscribers last quarter, and has lost 622,000 in the first 9 months of 2010. More evidence of "cord cutting"? Nope, says the cable giant. It's evidence that the economy sucks. That's the short version of the company's explanation for the drop during its earnings call this morning: It had a variety of reasons to explain the exodus of subscribers, but all of them revolved around money that their previous customers don't have or don't want to part with.

Um. That doesn't change the fact that they were cord cutters. One of the reasons why people will cut the cord is that cable TV is too expensive (something that Mark Cuban is still confused about). One of the things contributing to the "tough economic conditions" for people at home is the fact that their cable bill keeps going up and up to pay for the "billions" in retransmission fees that Cuban and others want to last forever. And that's only going to serve to drive more people to cut the cord.

Filed Under: cord cutters, denial, economy
Companies: comcast