The Rate Of TV Cord Cutting Is Actually Worse Than You Think

from the the-miracle-of-competition dept

It’s funny what a little added competition can do. It’s no surprise that with the rise of streaming alternatives from AT&T (DirecTV Now), Dish (Sling TV), Google (YouTube TV) and Sony (Playstation Vue) — last quarter saw one of the biggest cord cutting spikes on record. MoffettNathanson analyst Craig Moffett has noted that 2016’s 1.7% decline in traditional cable TV viewers was the biggest cord cutting acceleration on record. SNL Kagan agrees, noting that traditional pay TV providers lost around 1.9 million traditional cable subscribers. That was notably worse than the 1.1 million net subscriber loss seen last year.

The shift has finally forced a number of denial prone industry executives to admit things are changing, even if few want to adapt their products and services (read: lower prices) in order to weather the storm.

But while the simple metric of subscriber totals tells quite a tale, the story gets worse for traditional cable if you look a little deeper at the numbers. For example, Moffett has been one of the only analysts to emphasize how people who are moving or buying new homes aren’t signing up for cable at their new location. Millennials moving out of their parents’ houses aren’t either. So while the pay TV sector lost around 762,000 customers during the first three months of the year, that total is actually higher if you include movers and home buyers:

“By Moffett?s estimates, if you include the people who should have signed up for pay TV when they moved into new homes, ?nearly a million homes either cut the cord or chose not to take one in the first place in Q1.? The diagnosis: ?Identifying the root cause of the acceleration in cord-cutting isn?t hard. It?s not demand (the demand has always been there). It is supply. Would-be cord-cutters and cord-nevers are finally being given options,? like Netflix, HBO Now and, to a lesser degree, those skinny bundles.

Many of these folks have been labeled “cord nevers,” since they’ve never really subscribed to traditional cable — and have no intention to. You may recall that originally, these folks were mocked as irrelevant by the cable industry (including by Moffett, who used to be a cord cutting skeptic). And many cable and broadcast executives quite incorrectly believed that once these younger viewers got married and settled down, they’d see the error of their ways and return to traditional cable. That’s simply not happening.

And things really are only just starting to heat up. Amazon, Apple, and countless others are soon expected to throw their hats into the live TV streaming ring as well, ramping up what’s been already quite heated competition among streaming video alternatives. And while the push to kill net neutrality (which in turn lets companies like Comcast use usage caps to punish users that leave the Comcast pasture) could pour some amount of cold water on this evolution, this trend isn’t likely to be slowed down by much of anything.

And as we’ve long noted, it’s really not too late for the cable industry to adapt. They simply need to lower prices and offer more flexible viewing options. But while the industry has paid lots of empty lip service to this concept, most cable companies continue to blindly pass on endless broadcaster rate hikes, resulting in obnoxious retransmission disputes and blacked out content — only accelerating the rate of defections by disgusted subscribers.

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Comments on “The Rate Of TV Cord Cutting Is Actually Worse Than You Think”

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DannyB (profile) says:

Re: Re: I have to disagree

In that case the cable giants have the wrong thinking.

They should be racing to abandon 20th century cable tv. Everything about it is a relic of a past millennium. Sliced and diced into channels on one axis and time slots on the other axis. Not on demand. A season is not released all at once so you can watch it all in a weekend. Bundles that force people to have deeply offensive programming such as ESPN.

Advertising overload. Not enough content. Poor quality content. Characters that walk out onto the content after a long string of ads, and obscure the content — sometimes even IMPORTANT parts of the content that contribute to the plot.

You would think giant cable would be looking to move to the future and abandon the past as quickly as possible.

Anonymous Coward says:

If millennials just give up their daily coffee, they’d be able to buy their own cars.

If millennials just give up avocado toast, those layabouts can finally move out of their parents house.

If millennials just stopped buying a new iPhone every year, they’d have no student debt.


Anonymous Coward says:

Re: Re:

I love my digital antenna, which goes through my Tivo Bolt so I can jump past the commercials–I don’t want to go back to the antenna and get stuck with watching commercials again! I also get Netflix through the Tivo, and could get Hulu, HBO Go, and Amazon through the Tivo if I wanted to pay the subscriptions. There’s still a place in my life for Tivo, but not cable.

Totes McGoats (profile) says:

this is literally me

Have had cable since my first apartment in 2001. Sold my old house in late 2016 – only got internet in the temporary apartment. Moved in the new house a few weeks ago – no desire for anything but internet.

Once you go streaming only there is zero desire to go back – why would I ever want to watch anything that’s not on-demand, commercial free? Plus, since I am saving so much money I can buy shows on Amazon and iTunes and watch them indefinitely – cable goes away when I quit paying for it. And I can’t imagine any young person getting their first place ever signing up for cable in 2017.

TheResidentSkeptic (profile) says:

Can't stop the march of progress...

.. no matter how hard they try. They refuse to learn from history, and can’t see the future wall they are about to run into.

In the 1930’s and 1940’s families sat around the radio – then along came TV and families moved from radio to TV. Radio’s heyday was over.

Cable came along to give a lot more choice than the 3 broadcast channels. And broadcast moved out of relevance.

Facts – Water is a necessity; Food is a necessity; Their particular flavor of “Entertainment” is NOT.

Families no longer sit at home during the “prime time viewing hours”. They are out DOING THINGS. Or enjoying other forms of entertainment and relaxation.

I cut the cable; I dropped the dish; I use only streaming services. And I’m 64.

This is NOT a millennials issue – it is a change in the very CULTURE of life.

And if they can’t learn that and figure a way to be a part of the new culture of entertainment and relaxation – then they can “go quietly into that good night” of irrelevance.

DannyB (profile) says:

Re: Can't stop the march of progress...

You CAN stop almost any kind of march by arresting those participating in the march.

Similarly, you can stop the march of progress by arresting those participating in the march of progress. Ripping your CD onto a teeny device you can listen to while jogging? Get arrested. Cutting the cable cord to watch streaming internet? Get arrested. Etc.

Don’t think it can happen? Our freedom can vanish more easily than we think.

Anonymous Coward says:

the added of problems of having a president who is only interested in promoting businesses, regardless of the effect on the country or the economy as a whole and a leader of the FCC who is interested only in doing what the ISPs want, what they pay him ‘encouragement’ to do, regardless of the detrimental effects on everything else countrywide and how the rest of the world sees what is happening in the USA and the detrimental effects the USA is having on the planet, there wont be any changes until these two people are replaced with those who actually know what the hell they are doing and have legitimate reasons to do things, especially those that will help the USA in general!! as it is, the country is on a hiding to nothing!!

Anonymous Coward says:

Re: Re:

the added of problems of having a president who is only interested in promoting businesses,

What you have is a president who is only interested in protecting large corporations, and couldn’t care less about the many small businesses that also exist, as those do not help the 1% to get riche because they work for themselves and not to increase the wealth of the wealthy..

Ninja (profile) says:

So they finally agreed cord cutting is here and it’s bad. The first question is: is it too late to act now? I’d guess for some companies it is. The second question is: what will they do with the fact? Will they offer stream services? Will they charge fair prices? Will they offer option of watching single events (say, sports)? This last question, what will they do, should have been asked a few years ago. Now it’s going to be quite harder for some to promote the needed changes.

Anonymous Coward says:

If it's this fast when the options are DRM-encumbered...

Imagine how much faster cable TV would die off if the streaming alternatives worked properly on truly open platforms (no, supporting Encrypted Media Extensions does not count as open). Lack of EME-free viewing is the only thing keeping me from switching.

Anonymous Coward says:

Re: Re: If it's this fast when the options are DRM-encumbered...

In your zeal to deprecate Linux, your math is predictably flawed. Linux users are hardly the only ones locked out by EME, and I never said I was a Linux user. I happen to be a user who does not like the limited capabilities offered by EME-encumbered viewers. EME encumbrance is what prevents better viewers from working properly with Netflix streams.

The Wanderer (profile) says:

Re: Re: Re:2 If it's this fast when the options are DRM-encumbered...

One of the meanings of “deprecate” is “belittle” or “put down”. The example from the relevant WordNet definition is “The teacher should not deprecate his student’s efforts”.

This meaning is relatively obscure nowadays, except in the context of the stock adjective “self-deprecating”, in favor of the (software-derived?) sense “label as obsolete and due to be removed later” – but is nonetheless still in valid use.

Anonymous Coward says:

I just got one of those “promotional deal” fliers from the cable company I have Internet service from yesterday. They haven’t realized a damned thing. I pay just under $40 for ISP service. They wanted me to sign on with them for $80/month tv/phone/ISP. Sounds good right? Read the fine print. That’s 50% off for a single year with a 2 year contract. After the first year they want $160/month for the same service! So no, they are still pulling the same old tricks and haven’t learned a damned thing despite the numbers. And frankly, those numbers are tiny compared to the full market.

There’s no doubt there is a trend away from cable tv, but it’s not a major one still. With the current industry shills manning the FCC and Congress, the industry will end up with back room deals to disincentive such trends from continuing. Free market is great until it’s you who suffer from it.

Anonymous Coward says:

Death of cord-cutting

“And as we’ve long noted, it’s really not too late for the cable industry to adapt. They simply need to lower prices and offer more flexible viewing options.”

Except… they don’t need to adapt. Or lower prices. Or offer more flexibility. Not anymore. Along with the death of Net Neutrality will come the death of Cord Cutting. Since the largest ISPs are also cable tv providers, they will simply go back to their bullshit throttling and “shaping” until the only feasible alternative for customers is the ISPs cable tv package.

Thad (user link) says:

Re: Death of cord-cutting

I get that that’s the cable companies’ plan, but…you’re not saying it’ll actually work, are you?

Cord-cutters who are burned by poor connections to Netflix aren’t going to shrug and decide they just won’t be cord-cutters anymore. What’s likelier is another arms race between Big Media and pirates. (With a side helping of more people just watching YouTube videos instead of TV, because between YouTube’s popularity and Google’s lobbying power, degrading YouTube quality is an especially risky proposition for ISPs.)

AnaChronic (profile) says:

Re: Re: Death of cord-cutting

Agreed. Speaking as a millennial cord never, I’ve been without a home internet or cable subscription since I moved out on my own a decade ago. Between a smart phone and internet at work, I’m perfectly functional and honestly happier without the burden of either one. The death of net neutrality doesn’t suddenly put another $150+ a month into my pocket to throw at a cable subscription, nor does it alter any of the core reasons I’ve already skipped out on these services. I think the loss of net neutrality will have significant and detrimental effects on the internet as a cultural phenomenon, but the legacy cable providers have already nailed their own coffins shut. Like someone else said earlier, their basic flaw was assuming their particular brand of entertainment is as essential as food or water. It’s not.

Anonymous Coward says:

I moved a year ago and dropped cable (and home phone) in the new apartment, just went with internet. (I think the reason people wait to move and just not bother to pick up cable in the new place is because Comcast’s “retention team” does a hard sell if you try to cut the cord.) Internet alone cost $44.95 a month, down from $160 for “Triple Play”.

Yesterday, I saw the latest Comcast bill was for $75.99. I knew they’d raise the price for service, but couldn’t believe it was for that much!

I called Comcast billing, demanded a fix. The Comcast rep said that for $75.99, she could give me better speed on my internet AND give me a great cable package. I rejected her offer and told her I’d move to Frontier for internet if something wasn’t done to diminish my costs.

I’m fortunate enough to live in one of the few areas in the country with competition–the Greater Hartford area in Connecticut. In 2014, Frontier bought out AT&T U verse. They were terrible for a couple of years, but recently they seem to have worked out the bugs and have a much better reputation (a low bar, but still.)

The Billing rep sent me on to the Comcast “retention” rep who had the power to make me a deal I couldn’t refuse. She rolled the price back to $44.95 and gave me a faster speed, as I’d complained about Comcast’s slow speed: “It’s not worth $44.95, it sure isn’t worth $75.99!”

And the moral is: if there’s competition, the customer gets low prices and better service. Also, if they hadn’t been so greedy and raised the price another $10 or so, I wouldn’t have called to complain, I’d have just accepted it!

Rekrul says:

I haven’t watched traditional TV in a few years. Instead I download the shows I want to watch (or collect). Not only can I watch them whenever I want, commercial free, there’s no time limit to doing so. I can watch them a year from now if I choose. I’m actually a couple seasons behind on some shows, but since I have them, I can go back and catch up at my leisure.

There are many shows that I watched in the 80s and 90s which never came out on DVD and which I’d now like to see again. Sadly most of these shows aren’t available from any source, not even private sites that specialize in old TV shows. Fortunately that problem won’t happen going forward.

I wouldn’t be opposed to paying for good copies of these shows, if I could keep a permanent copy of them, but it doesn’t look like that’s ever going to happen, so in the mean time, I’ll continue to get my shows from unauthorized sources.

Do I feel guilty that I’m not watching the ads? Not really. I didn’t mind commercials when they took up 10-12 minutes of an hour program, but now I’ve seen “hour” shows that were less than 40 minutes. I think one I watched recently was 38 minutes! Not to mention all the popup ads on the bottom of the screen. Not just for other shows either! I’ve seen them advertise cars and even soup.

Anonymous Coward says:

>I wouldn’t be opposed to paying for good copies of these shows, if I could keep a permanent copy of them,

The reluctance of the Broadcaster to make shows available outside of when they are broadcast, is the same reason that they hate DVRs,is that given the choice, nobody watches, and they never pirate, the programming that makes them money, and that is the adverts.

Interested says:

” most cable companies continue to blindly pass on endless broadcaster rate hikes, resulting in obnoxious retransmission disputes and blacked out content”

This makes no sense. If they were just passing on the costs there would be no dispute or blackout, just a higher bill. The blackout happens when they fight the rate increase broadcasters want.

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