The Cord Cutting The Cable Industry Says Isn't Happening, Keeps Happening

from the not-just-a-river-in-Egypt dept

For years, we’ve noted how many cable and broadcast executives have decided that their best reaction to the growing threat of cord cutting is to bury their head in the sand and pretend it isn’t happening. Some industry executives like to insist that cord cutting remains an unimportant trend that will magically disappear once more Millennials begin procreating. Others — often with help from the press — like to insist the idea of cord cutting is some kind of myth perpetrated by mean bloggers, just to ruin everybody’s good time.

As a result, too many in the cable and broadcast industry have decided that the best response to a changing TV marketplace is more of the same: more rate hikes, more advertisements, more tone deafness, and more denial.

You may be shocked to realize that this isn’t working. In fact, MoffettNathanson analyst Craig Moffett, the telecom industry’s top media quote machine, pointed out this week that 2016’s 1.7% decline in traditional cable TV viewers was the biggest cord cutting acceleration on record thus far:

“With the results now in from all of the largest operators, it is clear that cord-cutting of legacy distribution services?that is, without including OTT-delivered virtual MVPD bundles like Sling TV and DirecTV Now (and soon, YouTube TV)?has at last meaningfully accelerated,? Moffett said. ?While there admittedly remain a few smaller operators left to report, the pay-TV business (as defined by traditional providers) ended 2016 shrinking at 1.7% per year, its fastest quarterly acceleration on record.”

Companies like AT&T and DirecTV have “solved” the problem of cord cutting by rolling subscribers of their streaming TV services (DirecTV Now and Sling TV) into their TV subscriber totals, hoping you’ll ignore that these users pay significantly less for service than their traditional TV counterparts. Other companies, like Comcast, have actually managed to eke out small quarterly gains in cable TV customers by leveraging their broadband monopoly and effectively giving TV services away on promotion — a short-term fix.

But the train is rolling all the same. ESPN, the poster child of industry cord cutting denial, only just recently acknowledged it will finally crack and offer the kind of stand alone streaming services it spent years claiming weren’t viable. The company’s also gearing up for a new round of layoffs to help counter the millions of lost subscribers (due to cord cutting and the rise of pared-down “skinny bundles”). It’s estimated that, at this juncture, ESPN’s losing around 10,000 subscribers per day — the lion’s share of which are paying too much money for content they don’t watch.

As always, you’ll have a good idea that the era of cord cutting denial is over when cable providers truly begin competing on price when it comes to their traditional cable TV offerings. Right now, however, the overarching name of the game for the sector is to insist that this cataclysmic shift the industry is experiencing is just a temporary phenomenon that needs riding out — and not, as the truth should make clear, genuine adaptation.

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Comments on “The Cord Cutting The Cable Industry Says Isn't Happening, Keeps Happening”

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44 Comments
Not an Electronic Rodent (profile) says:

Re: Re:

If we are lucky, some of these media giants that are in pure denial will become another Kodak.

A good wish indeed, but rather less likely I imagine; Despite the similar reality denial, unlike Kodak the big media companies are more in a position to buy laws to prop up their version of reality and in the current administration, I imagine a "helpful suggestion" is all it’d take anyway. But I can hope I’m wrong…

orbitalinsertion (profile) says:

Re: Re:

That’s a sort of interesting choice, Kodak, in that i think much of the time it is good for such entities to simply die. Why should a business perpetuate itself when the products they provide are no longer necessary? Clinging to life only from the business end is one possible reason a lot of companies just suck. No one wants to be good at providing the thing they were built upon. They just want to keep existing and taking money. So they merge and acquire and sell off and “diversify”, while the “core business” suffers.

Some things should die when their time has come. They shouldn’t be destroying the product/service landscape (if it isn’t already dying, like Kodak’s was) because they want to turn into a different kind of company.

Ninja (profile) says:

Re: Re: Re:

The thing is, Kodak had the tools to be the pioneer in the digital market and chose to protect their own cash cows. As Mr Rodent said before you the main difference is that copyright will ensure money keeps flowing to these companies keeping them on life support for a long time even when they should just fail. And then when they fail somebody will buy their intellectual property and abuse it some more.

Anonymous Coward says:

Re: Re: Re: Re:

Maybe, but in the TV industry there is an increasing separation between the Dinosaur distributors and the actual program production companies. Also old content is not much of a cash cow in a market that demands new content. If the production companies change their distribution to other channels using other models, then the dinosaurs are left with very little.

Michael (profile) says:

Re: Re: Re:

Companies with products that are no longer necessary need to innovate to survive. Kodak had every opportunity to become the leader in digital optical technology, but they failed to negotiate the innovator’s dilemma – they refused to produce products that would compete with their own established products and then found themselves behind the curve when the new technology caught up and surpassed what they were producing.

ESPN has been doing the same thing. They have refused to provide a streaming option that could eat into their sales on their cable programming. By the time they figure out that their business model is dying and they can’t stop it, they may be too far behind on a new model to keep up.

Anonymous Coward says:

Re: Re: Re: Re:

"because they want to turn into a different kind of company"
That’s just it, they don’t want to turn into a different kind of business because, in the short term, it means making less money.

Just like Kodak didn’t want to turn into a digital camera manufacturer out of fear of losing on consumables.

Just like ESPN doesn’t want to turn to digital streaming fearing that streaming will cut into its current lucrative deals.

I have no problem with a company that’s old as long as it adapts to the market instead of trying to control it.

That One Guy (profile) says:

"It's just a flesh wound!"

The cable industry’s response to cable cutters reminds me of the Black Knight from Search for the Holy Grail. They keep losing limbs/subscribers, yet insist that absolutely nothing is wrong and they’re as fit as ever, until they finally reach the point where they’re reduced to empty blustering about how they’ll get up and give you what for, just you wait.

They can either adapt and offer people what they actually want(as opposed to what the cable execs seem to think that the public wants) at reasonable rates, even if that means less profits, or they can continue to flail about same as always until they’re reduced to threats of ankle biting against a public that no longer cares about them and has moved on to better services.

jsjohnson says:

Here's an interesting thought...

Which group will break first, the content creators or the distributors?

It doesn’t matter how much pressure consumers put on Comcast/TWC/Charter if the networks refuse to budge. So who stands to lose more money faster in this scenario? And how will this potentially effect contract negotiations for channels just like ESPN that are silly expensive and increasingly irrelevant with always-on information from the internet. I see Comcast and Co. redefining contract periods to shorter and shorter timeframes as more people cut the cord. I think these paper tiger standoff’s between the networks and providers will eventually lead to the networks backing down instead of the traditional caving in of the cable companies who don’t want consumer backlash. At some point, the pain needs to be, and will be felt at the bottom of the distribution chain. Maybe then we can start getting rid of garbage channels that serve next to nobody but come bundled to justify a higher value than the content warrants.

Anonymous Coward says:

Re: Here's an interesting thought...

Consumers aren’t putting enough pressure yet. They still have a wide enough base to afford pulling these stunts, otherwise they wouldn’t. Then again they could also be playing a failing game of chicken, trying to see who gives in first without realizing they’ve already lost (unless they buy new laws).

As a joke, maybe the cable corps will try to pass laws forcing people to subscribe to their services.

That One Guy (profile) says:

Re: Re: Re: Re:

It’s not the same story, just the same topic.

So long as the companies involved continue to act like short-sighted buffoons, and continue to shoot their own feet by refusing to even admit that the market is changing, pointing out new examples of them ignoring the signs and new bits of evidence that show they’re wrong is adding to the discussion, not just covering the same ground as before.

When essentially an entire industry can’t even manage the first step in solving a problem, admitting that it exists, that’s something worthy of note and coverage, if for no other reason that maybe having the topic brought up when new developments occur might get them to realize that ignoring the problem isn’t going to solve it, and they actually need to do something constructive if they want to stay relevant.

Anonymous Coward says:

Re: Re: Re:2 Re:

You kind of just made the point that it is the same story.

I’m one of the people that wonder why this is so interesting to Techdirt. There’s so much to watch and so many ways to watch it, why so much hand-wringing on behalf of the legacy channels? The fall of ESPN isn’t anywhere near as interesting to me as a sports fan as the rise of league operated outlets (MLB is probably still doing the best job). And what’s the difference if I’m watching some show over an Apple TV app or via my cable company DVR?

And like the story says, the people dropping ESPN don’t even watch it. ESPN should do more to make money from people that don’t watch their programming?

The television whole cord cutter issue is about as interesting as the shift from landlines to cell phones.

Derek Kerton (profile) says:

Re: Re: Re:3 Re:

“And what’s the difference if I’m watching some show over an Apple TV app or via my cable company DVR?”

With respect to which team wins, who hits a home run, and how much you enjoy the double play — nothing.

But with respect to the entire make-up of the multiple industries that play the sport, produce the video content, store and deliver it to you, and provide the devices you use to receive it and display it — the changes are massive, disruptive, and involve the shift of the distribution of billions of dollars.

That warrants discussion.

Thad (user link) says:

Re: Re: Re:3 Re:

The television whole cord cutter issue is about as interesting as the shift from landlines to cell phones.

About as interesting as a massive shift in human communication and technology that has created entire new industries, fundamentally changed others, and played a prominent role in massive international social upheaval?

Yeah, that sounds friggin’ boring.

Eldakka (profile) says:

Re: Re: Re:3 Re:

why so much hand-wringing on behalf of the legacy channels?

It’s not hand-wringing.

It’s an "I told you so".

What is happening to the cable industry as a result of their own actions.

Which is exactly the type of result TD has predicting from the types of actions being taken, not just for the cable companies, but for the copyright-industry companies that hold too-tightly to the ‘old’ copyright model, and don’t innovate and find new business opportunities.

It has and is happening to the Record companies, movie industry, and now the cable companies.

Anonymous Coward says:

Re: Re: Re:3 Re:

It’s interesting because these cable idiots will boast about how they’re dominating the market, up until the point where they start lobbying for more protection. Then it’s somehow all the consumers’ fault.

Each and every instance of their collective denial is proof that they don’t need the help, even if they ask for it.

Anonymous Coward says:

The cable industry response may be to say it’s not a issue, but the results have been to add CAPS. See if you limit how much content a person can download, you can slow down and even make these streaming services not worth it as now to stream them you have to fork out more money to get more data from the cable company.

The other thing is that they make it cheaper to get a bundle then Internet only service. Even though all I wanted was Internet, it was cheaper to get this dumb small bundle I didn’t want for Local channels with a basic cable box that I don’t use and I still use my Antenna for the local channels with my TIVO. Plus got thrown in Showtime or HBO, I picked HBO and just use the HBOGo app to watch the very few times I ever bother to watch HBO. Comcast won’t allow HBOGo to work on TIVO.

So these cable company’s are saying one thing, but doing all that they can to slow cable cutters down.

Ninja (profile) says:

Re: Re:

Not all they can but rather all they believe they can do to sustain the dying cash cow. If they had already accepted it isn’t going to stop and the cow is going to die they’d be offering streaming a la carte (for channels or individual content) to whoever wants to throw money their way with added functionality to make them stand in the crowd and have people prefer their services. As the Kodak and Blockbuster examples above, if one went down the digital cameras path and the other embraced streaming earlier they’d be the dominant players. Instead they are dead.

Anonymous Coward says:

I’ve been off cable now nearing 2 years. I was paying $150 a month (no premium channels) for Cox Contour whole home DVR which never worked right. I don’t miss it. I keep getting mail from Cox since I still use them for internet for great deals on cable again. $39.99 for 12 months with the expanded cable package I’d normally get. Then by the time all the rental fees were added (no DVR just 2 HD receivers) it was up to $80.00 a month. After 12 months it would increase to $125 a month. Hulu, Netflix, and OTA gives me plenty for $20 a month.

sleeve98 says:

history rhymes...

This is the same as when the recording industry ignored/laughed-at/fought/lost-to MP3s, and the same melodrama exists now: pay-TV feeders will adapt or they will die.

But don’t worry – the corporate charter (Profit! to the exclusion of ANY human considerations!) will win the day. It ALWAYS does. And consumers, the very method of the bread’s buttering, will lose. We ALWAYS do.

SirWired (profile) says:

The content trends have been fascinating

Okay, businesses being morons by continually raising prices while providing a sub-par product they happen to have a monopoly on is nothing new.

What’s interesting is the environment this is all happening in.

The top rated scripted show on TV last year was the Walking Dead, with an 18-49 share of 8.8. Using a chart from 1995, that would have put them between #13 “Murphy Brown” and #14 “Hope and Gloria”; I vaguely remember Murphy Brown, and I don’t remember it being a smash it. The most-watched broadcast entry, Big Bang Theory, would have tied for #50.

Despite the numbers for almost every single show being far lower than what would have been acceptable a couple decades ago, we are currently living in what is regarded by many TV critics as a “Golden Age of TV”. Never before have we had such an embarrassment of riches; shows that are excellent by any reasonable standard.

I don’t think it’s an exaggeration to state that all this has been brought about by the cutthroat competition; we aren’t tied to The Big Four and a tiny handful of cable stations any more, so there’s more pressure to carve out a niche by producing something new and different.

P.S. Yeah, there’s oceans of worthless schlock too… gotta put something on those hundreds of stations, but hey, you don’t have to watch that either.

AnaChronic (profile) says:

“Other companies, like Comcast, have actually managed to eke out small quarterly gains in cable TV customers by leveraging their broadband monopoly and effectively giving TV services away on promotion — a short-term fix.”

Literally giving away their product to make their numbers look better? This is why Comcast’s executive leadership takes home multiple millions in compensation? Something tells me this situatin is not going to last long.

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