The Myth of the ‘Cord-Cutting Implosion’

So, what about cord-cutting??

  • Does a drop-off in cable subscriptions mean the end-of-history-as-we-know-it?
  • Will ex-network programmers soon be competing with ex-producers and ex-newspaper scribblers for barista jobs at Starbucks?

Our recommended analyst of video platform trends is Will Richmond. His indispensable newsletter is VideoNuze, where he recently debunked the ‘Myth of TV’s Implosion’ from cord-cutting.

Here are the Big Takeaways from VideoNuze:

  • When it does happen, cord-cutting is largely an economic decision, made by people who can no longer afford pay TV.  They tend to reconnect when their earnings recover.
  • Cord-cutting actually decelerated in Q3 2013.  And giant operator Comcast actually gained subs!
  • Why haven’t they left in droves?  Subscribers don’t have so many attractive alternatives.
  • Live TV viewed on an actual TV set is still the primary use for all age and income groups.
  • The viewing habits of today’s youth won’t start to affect the industry for 10+ years.
  • Pay TV operators would love to break up the bundles of channels and offer smaller, cheaper packages, but its the network operators who won’t unbundle.  According to networks, bundling keeps fees down by spreading costs.
  • Cutting the cord doesn’t really “free” subscribers to pursue alternatives because the pay TV operators are heavily invested in broadband, and they can impose bandwidth caps to make up for lost revenue.
  • Americans are watching more TV than ever.  They’re just not watching it Live.
  • The TV industry is changing, but it’s not changing as fast as many would like it to.  Most industry players are still making money so there’s no incentive to change.   Take a look at how Cable TV contributes the majority of Hollywood’s profit.
  • Netflix data and technology can’t tell how to produce content, but it can describe what kind of content to create.  How soon before networks start employing this methodology instead of relying on producers and programmers?
  • Binge viewing is now not just a trend, but an ingrained habit for many viewing households.  Content quality is as good as it’s ever been, but viewers have more control over how and when they consume it.  Many viewers save an episode, or often an entire season, for the perfect viewing moment — like a gift or reward to oneself.
  • The traditional linear schedule is more at risk to lose ground, but advertisers will continue to defend their turf.

Bob Watson’s Takeaways

Bob Watson is a valued colleague who was until recently a key exec at TimeWarner Cable where he helped decide which channels were to be included in TWC’s programming packages. He now heads Watson Media Group.

We asked Bob for his big Takeaways on the threat of cord-cutting, and how US cable operators are responding.

  • “What cable operators have done well in the past is to aggregate content, bringing a vast array of programming together in one place.  The value of that aggregation has diminished in the last 10 years as content has increased along with the alternatives to access it.”
  • “Why is Netflix successful?  Because they provide a good selection and great value.  Cable operators have a better selection of movies and on-demand content, but the price and content discovery leave a lot to be desired.”
  • “The fix? The answer is ‘Better utility for cable customers.’
  • Comcast CEO Brian Roberts, just revealed at CES that their Q4 results include modest video subscriber growth for the first time in years. And the reason? The new X2 viewer interface.  Similar technology is in the pipeline from other major cable operators.

Don’t miss Roberts’ presentation of the impressive design and functionality of the X2 at last year’s NCTA:

BTW: Duck What?

  • For their fascinating demo, Comcast’s X2 team selected hits like Downton Abbey, Game of Thrones and Duck Dynasty as examples of appealing programs.
  • What’s the bet that A&E’s Duck Dynasty will be dumped from future proud presentations of the US cable industry’s offerings?

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One comment

  1. Owen Tuby says:

    Thanks for the reminder of Will Richmond’s “Myth of TV’s Implosion” from some weeks back. The problem with this analysis is that he fails to deal with our changing definition of what TV is and is becoming. Cords are not cut so much as they are being changed out for cheaper more adaptable connections.

    As to Roberts and Comcast’s X2, I can learn more about the future of TV by standing in the electronics department in Walmart overhearing people advising each other on the merits of buying an over the air antenna and dropping cable or satellite service….. the true surprise will come when Comcast takes real customer service seriously.

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