Cord Cutting Denial Is Alive And Well

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

You might recall that former Sanford Bernstein analyst Craig Moffett made a bit of a career by mocking cord cutters as poor, irrelevant basement dwellers, when he wasn't denying their existence entirely. Now at his own firm, Moffett has taken a complete 180 in recent years, unable to deny that cord cutting is a very real phenomenon that's only growing as the pay TV industry refuses to offer more flexible pricing options. And, contrary to Moffett's original analysis, most data shows that cord cutters tend to be young, gainfully employed, and well educated.

No worries though -- someone at Sanford Bernstein appears to have picked up the cord cutting denial mantle. Bernstein research analyst Todd Juenger this week has been making headlines for a research note that not only claims all of the new cord cutting options arriving in 2015 will fail (whether it's Sony's Playstation Vue, SlingTV or looming services from Apple and Verizon), but that cord cutting quite simply isn't happening. To prove it, he cites a non-specific "body of evidence" that he claims proves few people really want these services:

"A strong body of evidence is emerging that suggests to us that none of these services are likely to gain much traction," he said. "Simply put, for existing pay-TV subscribers, the content is too limited (relative to the cost savings); and for cord-nevers, the price is too high (relative to the appeal of the content)."

There's a bit of an ongoing media narrative afoot that new streaming options just aren't any good because users have to subscribe to every one of them just to get the same volume of content they get from traditional cable. But these narratives usually ignore the fact that users want something notably different from traditional cable. They also ignore piracy entirely in their analysis for whatever reason, which seems absurd when you're trying to take a bird's eye view of where the TV market sits.

Still, Juenger proceeds to insist that meaningful cord cutting "isn't likely to happen," and so the cable TV industry should do its very best to protect the "status quo":

"Cord-cutting, in large numbers, isn't likely to happen," Juenger said. "It's one of those ideas that sounds great in the abstract but crumbles when faced with the reality. OTT services seem poised to garner few subscribers, which is more good news than bad. We believe it's better for the pay-TV ecosystem to remain in the status quo than to add millions of OTT subscribers at the cost of blowing the whole system apart."

One, cord cutting is already happening in meaningful volume. Craig Moffett, the guy that used to deny cord cutting like Juenger, recently noted that he believes the pay TV sector lost 1.4 million total subscribers last year, largely thanks to cord cutters or "cord nevers." Two, most of the news outlets reporting on Juenger's comments didn't mention the fact that the "focus group" his statements were based on consisted of a whopping 18 people, nowhere near enough to actually make the kind of pronouncements he's making (he cautions people from making too much of the findings for this reason -- right before he himself apparently makes too much of the findings).

It's not clear why Bernstein analysts always seem intent on being at the forefront of cord cutting denial -- you'd hate to think they're trying to somehow influence stock holdings or performance by intentionally giving bad advice. But cord cutting is very much real, it's very much growing, and there's finally a flood of over-the-top streaming options arriving later this year now that broadcasters have started easing up on licensing restrictions. Advising the industry to hold tight to the "status quo" in the face of Internet video in 2015 is akin to telling residents in the path of a tsunami to stop worrying and have a cocktail.

Filed Under: cable, cord cutting, craig moffett, denial, todd juenger, tv
Companies: sanford bernstein

TV Analyst: Kids Love Netflix, And Disney Should Break Them Of That Nasty Habit

from the future-proof dept

The broadest, most obvious trend in media consumption is the shift to an on-demand world, where content is available when you want it on whatever device you're using. In the day-to-day, this gets lost behind neverending squabbles about licensing, and severely limited offerings accompanied by bold statements about embracing technology—but in the long run, what's happening couldn't be any more clear. Any long-term strategy for relevance and success in the world of media has to embrace that momentum by building new business models around such distribution schemes, while gracefully dismantling the business models that rely on dying habits and the limitations of antiquated technology.

Or, you can attempt to reshape the cultural norms of future generations by going to the source: kids. At least that's what analyst Todd Juenger suggests in a recent report about children's programming on Netflix. Juenger conducted a focus group with mothers and discovered that they really like Netflix as a source of entertainment for their kids, especially since they can put it on whenever they want—and that kids are growing accustomed this. To hear Juenger talk about it, you'd think this was both surprising and bad (it's neither). His advice to the providers of children's programming? Stop this trend immediately:

His advice for entertainment companies is to be cautious about how much kids programming they make available to the online video streaming provider and in which windows. "We remain firm in our belief Viacom and Walt Disney should limit their content availability on Netflix," Juenger wrote.

...

"Moms are increasingly directing their kids to alternative viewing modes for content control, commercial avoidance and time management," Juenger summarized the findings. "The moms we talked to originally subscribed to Netflix for themselves, but have recognized the dwindling supply of content for adults and are now using the service primarily for their kids…The content selection is perceived to be significantly better for kids than for adults, and the lack of commercials and ability to control the viewing choices are seen as positives.”

According to the analyst, the focus groups described children as device agnostic, "happily watching on TV sets, tablets, computers, even phones, with indifference." The result: “Our concern regarding Viacom and Disney’s kids’ networks has been reinforced,” Juenger said. “Viacom and Disney should do everything in their power to steer viewership toward modes with the best long-term economics, namely traditional TV and emerging forms of TV Everywhere VOD.”

Yes, he's confirmed that the "lack of commercials and ability to control the viewing choices are seen as positives", in case anyone in Hollywood was still clinging to the hope that consumers would grow to hate those things. And yes, kids are "happily watching" on a variety of devices, and we can't have that, can we? Some might respond to the observation of a clear consumer preference in young children by trying to embrace that change early (if anything Hollywood does with technology can be called "early" at this point) but Juenger thinks they're better off trying to hold back the tide, or at least redirect it into their proprietary canals.

The funniest part is that suggesting Disney and Viacom should try to "steer viewership" is appealing to the very power such companies are losing. Big media empires don't get to "steer viewership" the way they used to, and that's exactly why these new distribution methods represent a threat to them. Juenger is suggesting they keep the sinking ship afloat by tying it to... itself. That's not going to work.

Filed Under: on demand, todd juenger
Companies: disney, netflix, viacom