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.

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Companies: sanford bernstein

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Comments on “Cord Cutting Denial Is Alive And Well”

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Vidiot (profile) says:

There’s another group Juenger misses: entrenched customers, maybe a bit older, who engage enthusiastically with multiple OTT services, but who haven’t cut the cord… yet. [Raises hand] And we’re constantly seething over the crazy-high rates these mercenary cable providers charge, with their inflexible channel packages and near-mandatory services bundles. Something, some day, will turn the seethe into rage, and we’ll all be gone.

PRMan (profile) says:

Re: Re:

This is me. The day that my 78-year-old all-day-TV-watching dad is no longer living at my house, I will be gone so fast it will make your head spin.

I ALREADY subscribe to Netflix and Hulu and I have Amazon for shipping. I watch all 3 occasionally, although not every month. Other than that, I watch college football and hockey. And I can get those through GameCenter and WatchESPN.

I could turn a $1200 annual cable bill into a $350 annual cable bill easily.

DB (profile) says:

I agree that the new services are expensive for the value returned.

We already have Netflix, Amazon Prime, Hulu Plus and Plex. We added an Ownzones channel this month, mostly for the Chromecast deal.

We are completely awash in available options. The topic of missing something on broadcast or cable TV never comes up.

And with all of content available, we are still paying far more to Comcast for their unreliable internet service than for all of these combined.

Anonymous Coward says:

When I cut the cable cord, I didn’t do it with the intention of then signing up for every single streaming service that comes along after. I cut the cable cord in order to cut costs for a service that I found overpriced and overburdened with crap.

I have Netflix and Amazon Prime. I sometimes rent stuff through Google Play or Vudu. That’s it. I’m not signing up for another service unless that service offers me a compelling reason to do so. Meaning, the cost of the service is low and the content available on it isn’t available on the services I’ve already signed up for. I’m not signing up for the new services that try to replicate cable TV but over the internet where you still have to watch on their schedule. It’s not happening.

They’re using this argument of the costs of signing up for ALL the streaming services as an argument against cutting the cable TV cord. How many cord cutters are actually doing it that way, really?

Matt Strohbehn (profile) says:

Another flaw

One thing not mentioned as much, is that the pricing comparisons they show are to get all of the options of cable… does anyone actually use all the channels available? Most cord cutters (or potential cutters) don’t need or want all the useless channels that are offered. If you only get the content you actually see yourself using, it’s probably going to be cheaper.

Anon says:


If “free” TV is going the same direction as in Canada – even the main attractions, such as pro sports, are working their way onto extended channels which cost extra. Thus, the major appeal of local “broadcast” TV is disappearing. Series? Neflix (where you can binge watch). News? Internet. Commercials? Why???

Take as an example – a year or so ago I got into watching Weeds. Obviously, not on regular TV any more. Watch on Netflix. Ran out of seasons. Get the next one on US Netflix with VPN. Don’t have the last 2 seasons? Download. Same for homeland. Watch two seasons on Netflix. Switch to UK Netflix for season 3. Download the last season because nobody has it. See the pattern?

The biggest advantage is being able to binge-watch. Sadly, some of the more amateurish series are painful to binge-watch. (24, which I never saw originally, are a bunch of bumbling boy scouts. The wildest fiction about it, you know it was set in the future because the president is black.)

Cable TV is following newspapers into oblivion; desperately trying to suck more money from fewer people by any form of paywalling things people can get elsewhere for free. They just have a lot further to fall than does the Podunk Times.

eaving (profile) says:

Re: I don't entirely disagree with him.

Who in fact needs ‘it all’? I’m not denying, were it cheap enough, I wouldn’t turn down the option. But realistically what do most households watch? 5 channels? 10? Hulu/Netflix covers the vast bulk of my needs. Frankly if the BBC would get their heads out of their asses and let non Brits pay the license fee and stream I’d happily toss them some money as well. As for the other streaming services, I’ll keep an eye out and possibly swap what I’m subscribing to, but I’m certainly not looking to build up a 200 channel package and that seems to be what the deniers don’t get. I don’t need the ‘Weather between the 42nd and 43rd parallel on a tuesday channel,’ just a short list that run the bulk of the stations I want.

Anonymous Coward says:

Piracy exists because there is no legal means, or it’s drastically easier to get the content you want. On top of that the ‘limited content’ that is enjoyed by cord-cutters is a direct result of the monopolies that the cable industry is protecting.

With new services like coming online and offering sports, and the major channels it’s more than clear that Mr Juenger is either an idiot or a shill.

nasch (profile) says:

Re: Re:

On top of that the ‘limited content’ that is enjoyed by cord-cutters

It’s a classic dismissal of new services and products by entrenched players. It’s limited. It’s too expensive. It’s too niche. It’s not useful enough. And then fairly quickly it becomes good enough for a lot of people to supplant the incumbent service, before they even take it seriously.

nasch (profile) says:

Re: Ber

Bernstein is an WS investment research firm and likely has $ (or its clients have $) in incumbent operators.

That is not enough to explain this, unless they’re also stupid. Investors in the incumbents should be loudly warning about the coming wave of cord cutters so the companies can do something about it, not sweeping it under the rug so that they ignore it until it’s too late and the company tanks.

Michael (profile) says:

users have to subscribe to every one of them just to get the same volume of content they get from traditional cable

Where do they get that little gem? Say I have 100 channels from traditional cable, I get 2400 hours of content in any given day and can watch a maximum of 100 different things at any given time. Netflix blows that completely out of the water. I probably have 2400 hours of just Law and Order episodes available.

Anonymous Coward says:

Atypical Consumer Here...

Where I grew up, cable TV wasn’t an option; all we got was OTA channels. As such, I got used to picking and choosing what I wanted to watch on my four channels available — I generally found there was something to keep me occupied most evenings.

Eventually I moved somewhere that had cable, and found that the actual programming available wasn’t any better than what I could get OTA, unless I wanted to subscribe to the most expensive options. Instead, I just dropped cable and contintued to get my TV OTA.

When DVDs came along, I started to augment my viewing with box sets of TV shows I’d missed/enjoyed, and then realized that the local library was also doing this — and had started allowing you to request discs online (you’d be notified for pickup when they were available) so I started doing this. Shortly afterward, NetFlix came along, doing the same thing. I didn’t bother with them, as the local library had pretty much the same selection and faster turnaround. NetFlix grew, but I already had all the evening programming I had time for, so still never subscribed.

Then YouTube came along, then Vimeo and DailyMotion, and I found that their content was more interesting than most of the stuff traditional TV was offering, so I stopped watching OTA TV and started watching streaming content instead, still borrowing box sets for TV shows that sounded interesting.

Then both Netflix and TV stations started streaming their content online. I figured “Why not?” and started watching TV this way. I quickly found out that there were really only a few shows I was interested in despite all the choice out there, but was happy to be able to watch those few. Eventually, I ran out of interesting shows on Netflix and stopped subscribing, instead subscribing to more YouTube channels.

And that’s still where I am today. My foray into cable was short and underwhelming. It just wasn’t worth what I paid for it, even for the basic package.

As I said, I’m not a typical consumer, but coming at cable TV not from the “this is what we’ve always had” angle, even 20 years ago I saw no benefit to what they were offering. HBO always went to videocassette and into the library system back in the day, and I stopped being willing to watch programming when some broadcast station thought I should the day I stopped watching OTA TV.

Anonymous Coward says:

I gave up on the entire concept of TV. The programs and shows are set to the level of a moron. It’s an insult to intelligence. The constant repeat of reruns over and friggin’ over; if I’ve already seen it, why would I chose to see it again? News that is heavily filtered by corporate owners fearing to hurt the feelings of their advertisers. I see news on the net that happens which never, ever, makes it to the public media. I guess it doesn’t bleed enough but it is highly important to your future.

I don’t need a vehicle to serve me ads. That’s what the shows are about today. I don’t need to pay a bill that is far too expensive for the product offered with service that is next to nothing if you have problems. Here’s another clue, if I do have problems I would like to talk to a real person who understands english, can speak it, and can offer actual solutions that work or forward it to a work crew if they can’t. It’s not up to me to make your product better or make it work.

Finally, price. Where did you get the idea that there is an endlessly filled wallet in each of our pockets? Ever hear that people are having a hard time while they aren’t getting paid much? The price raises on cable and PPV tv are insane. When it comes to a crunch and you have to decide what to cut out, it’s not very hard to make that decision when you look at how much you are paying for what you are getting. The continual jacking the price does have a result and cord cutting is shoving it in your face you’ve went beyond that point.

Brian says:

I have cut the cord to save money. I also dislike all the commercials. I also dislike how cable is setup. I don’t mind the streaming, but they should advertise what the program is (while in commercial) because as I flip through the channels, I have no idea what the show is. Plus flipping through channels, almost 90% of them are at commercials. I am not going to pick a stop on a commercial, finish out the series, then when the show picks up, notice that I don’t want to watch that and go to the next.

Same with DVD rentals vs purchases. IF I BUY/PAY FOR something, then I don’t want further money schemes such as additional ads and commercials. If I PAY FOR cable, give me commercial free viewing. Commercials are a way to make money that should be offered for free/cheap service. Don’t want to pay for cable? Ok here is a free, ad/commercial supported cable service. Oh, want to pay $50 a month, then here is your ad-free cable service.

I also think that if you PAY for ALL of cable channels, you should also have them unlocked and free for streaming purposes. For Example, AMC. I should be able to use my Roku to pull up all of the past AMC shows and series. It shouldn’t be an extra service.

Kevin (profile) says:

Cord-Never Kids

Something that is overlooked is the generation of cord-nevers that we are raising. As our kids consume more content away from the living room TV, they are even less dependent on that cable content.

We cut the cord a long time ago and our kids have never really known cable. We were visiting someone at the hospital a while back and they were trying to watch TV.

We first had to explain to them that they could not just tell us what they wanted to watch. We had to first look at what was playing. Once they picked from their 3 options, they asked if we would start it from the beginning. By the time we got done explaining that it was streaming on a schedule, the commercials started.

They were clearly not impressed with cable.

Bryan Naylor (user link) says:

Re: Cord-Never Kids

I couldn’t agree with Kevin’s comment more… We opted to cut the cable 3 years ago and over time have leveraged a few different streaming options. We’ve now moved over to leveraging an Android based streaming player to get the content we need… all free.

One of the options available on the streaming player we use, is an add-on that does offer “live streaming” of programming from major networks.

I was channel surfing the options with my 10 year old beside me and we decided to watch an episode of Two and a Half Men.

When the episode started, he wanted me to rewind it pack to the beginning so we could watch. When he found out we couldn’t his immediate reaction was “this really sucks”… “It’s like living back with the dinosaurs”.

Children especially are growing up in a time when “On Demand” viewing content is available from a huge variety of different sources. Cable TV has seen it’s time… Even the Cable companies are rapidly starting to realize this and are offering the content to subscribers streamed at radically reduced pricing.

Our kids, won’t ever go back to a Cable Service, now that they’ve been exposed to On Demand Streaming and I can’t help but think that Kevin and our children are all that unique…

charliebrown (profile) says:

We ADDED Cable Just Last Year!

Why? Because most of what we watch on there isn’t on DVD or the streaming services. But that’s OK, because our DVR takes care of what time we watch it and commercials are simply fast-forward-ed anyway.

To be honest, we don’t have “the full package” and soon we will have less channels than we currently do (unless we pay $20 per month extra because the price went up) but again it’s OK because they’re just channels we seldom watched anyway.

Mind you, if the price goes up again next year, we will wrap up watching what we are currently watching and dump them like a hot potato!

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