What’s all this about TV cord cutting?

March 15, 2011

When media bigwigs argue that they haven’t seen any evidence of real cord-cutting — and, believe us, they love to argue this point —  they can back it up with some new statistics from researchers over at SNL Kagan. For those of you who have fallen behind with industry jargon, cord-cutting is the idea that Americans are canceling cable and satellite television subscriptions because so many movies and TV shows can now be found on the Web — for far less than the cost of pay-TV. Huge issue, obviously, since these subscripti0ns are a pillar of today’s TV business. Not only are they the chief source of revenue for cable and satellite companies, but they help line the pockets of media companies such as Time Warner or  Disney who collect fees for the TV shows they create.

Understandably, industry executives often downplay cord-cutting, attributing subscriber losses to factors like a bad housing market and high unemployment. For sure, it’s hard to know exactly why the industry lost hundreds of thousands of subscribers over the second and third quarters of last year. But SNL Kagan’s figures suggest the picture may not be as bleak as many feared.

The numbers show that while the pay-TV industry — including cable, satellite and telecommunications companies — lost about 335,000 subscribers in the middle of 2010, the losses subsided by the final months of the year. In fact, the industry added 65,000 subscribers in the fourth quarter, the data suggests. In all, the industry ended the quarter with 100.1 million subscribers, up slightly from both the third quarter and the fourth quarter of 2009.

From the SNL Kagan release…

Despite the inconclusive trend lines between sub adds and sub penetration rates, the fourth-quarter gains do reinforce the importance of multichannel video, and we project more stable macroeconomic conditions will guide the way for absolute video sub adds if not gains in penetration. However, the greater underlying issue remains more screens and alternative platforms competing for users’ attention than ever before. The changing content landscape impacts the potential pool of video subs negatively so we expect intra-multichannel competition to escalate while video penetration rates decline over the long-term.

In other words, don’t go breaking out the champagne.

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Cord cutting is the trend. As more people experience online tv services like Tvdevo.com , Netflix, etc. they’ll find that it’s easier to use and, in some ways, superior to traditional cable. Bottom line is that Cable tv companies are hurting because the internet is eating into their market. The same thing happened to the video rental business and many other industries. They can’t stop the tide of change.

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[…] TV and advertisers keep focusing on the kiddie crowd. Where's the logic in that? I hope the cord-cutting trend for cable TV continues. Eventually people will realize they've been paying cable companies too much money to […]

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