Shocker: Study Finds Cord Cutting Very Real, TV Execs Still Failing To Adapt

from the can't-stop-(r)evolution dept

You’ll perhaps recall that broadcast and cable executives spent years denying that TV cord cutting was even happening. Ultimately that head-in-the-ground thinking “evolved” to the point where sector executives admitted that sure, cord cutters are real, but they’re little more than 40-year-old nobodies living in mom’s basement — and not something to actually take seriously. As the data began to indicate that cord cutting was a very real phenomenon that thinking has finally started to subside, though the industry by and large has responded by doubling down on the bad ideas that brought us to this point in the first place.

There’s still a sect of broadcast and cable executives and analysts that truly believe this shift from bloated, pricey channel bundles to cheaper, more flexible streaming alternatives is just a fad kooky kids are going through. And there’s more than a few sector executives who believe this will all magically end as younger generations procreate and buy new homes. Of course that’s not really supported by the facts, with most Millennials and younger generations being “cord nevers” — who fail to see the point of subscribing to expensive bloated channel bundles in the era of YouTube and Twitch.

A new report by the Diffusion Group highlights again how this isn’t just some temporary hiccup in the tastes of fussy viewers. The group predicts that at the current pace of customer defections from cable, the number of US households that subscribe to traditional cable will drop from 81% this year to 60% in 2030:

“Generally, TDG expects that the penetration of live multi-channel pay-TV services will decline from 85% of US households in 2017 to 79% in 2030. While statistically a loss of only 7%, it nonetheless illustrates the ongoing secular decline of a once healthy market space. TDG predicts that, by 2030, roughly 30 million US households will live without an MVPD service of any kind, be it virtual or legacy.

During this time, legacy MVPDs will experience considerable subscriber losses, due not only to long-term industry trends but also growing competition from virtual pay-TV providers. Consequently, legacy pay-TV penetration will fall from 81% of US households in 2017 to 60% in 2030, down 26%. At the same time, virtual pay-TV penetration will grow from roughly 4% of US households to 14%, up 350% but from a very small base.

And while some traditional, legacy TV viewers will flock to “virtual” streaming alternatives like AT&T’s DirecTV Now or Dish’s Sling TV, those services cost significantly less than traditional cable options (which usually clock in at $110 or more per month). That’s why most cable providers have been so busy imposing arbitrary and unnecessary usage caps and overage fees on broadband connections, as it allows them to counter these lost TV revenues (with the added bonus of hamstringing competing services that aren’t zero rated, something you’ll see a lot more of thanks to the looming death of net neutrality).

Needless to say, the report highlights how cable providers still need to get out ahead of this shift, instead of just paying empty lip service to adaptation:

“TDG said early on that the future of TV was an app. Unfortunately, most incumbent MVPDs weren’t taking notes,” notes Joel Espelien, TDG Senior Analyst. “The question is no longer if the future of TV is an app, but how quickly and economically incumbents can adapt to this truth and transition to an all-broadband app-based live multi-channel system.”

Again though, industry executives weren’t just “not taking notes,” they were actively trying to ignore a massive, wholesale shift in how their business sector operates. Most of the entrenched cable operators could easily nip this entire shift in the bud by simply competing on price and bundle flexibility. But instead, countless cable and broadcast executives continue to just double down on legacy turf protection and rampant rate hikes — in the false belief that the traditional TV cash cow they’ve been milking for decades is somehow immortal.

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Comments on “Shocker: Study Finds Cord Cutting Very Real, TV Execs Still Failing To Adapt”

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Ninja (profile) says:

“But instead, countless cable and broadcast executives continue to just double down on legacy turf protection and rampant rate hikes — in the false belief that the traditional TV cash cow they’ve been milking for decades is somehow immortal. “

Kodak would approve it but then Pai had to come and threaten the party by making such idiocy sustainable due to natural monopolies and regulatory capture.

Anonymous Coward says:

Local Antenna TV

I project that in 10 years local (in this location) Antenna TV will be a thing on the past.

Currently there are about 5 local stations or about 20 channels here discounting the shopping and weather channels.

A quick programming analysts is 50% of the time is commercials or fill and 50% is program.

Programs range from the rage of the mid 1950s to more advanced programming of the 1970s.

The Lawrence Welk is one of the better programs. Laramie another favorite (to whoever is sponsoring the programming) does not hold up well to Welk. The reception is for Laramie is so bad one is glad to switch back to Welk and more glad to turn TV off in lieu of the old laptop with U-Tube.

yankinwaoz (profile) says:

Re: Local Antenna TV

I’ve wondered the same myself.

A TV network has to pay to broadcast OTA. They have to pay a license for the spectrum. They have to pay for the transmitting hardware, land, and operations staff. And they have to pay for the power needed to operate the transmitter.

They have no idea who is consuming their OTA signal. Instead they have to pay companies like Neilsen Ratings to find out.

On the other hand, they get paid by cable TV operators to get their content. The cable TV company pays for the transmission infrastructure. And digital cable knows exactly what is being watched and by what subscribers.

If 85% of their market was getting their produce via cable, then why were they even bothering to pay to deliver it via OTA?

Roger Strong (profile) says:

Re: Re: Local Antenna TV

Here in Canada that OTA signal comes with at least one major cable perk: The CRTC requires the cable companies to carry some local channels in their basic cable package. (“Mandatory carriage”) Which is almost always the local OTA broadcasters. Being in the basic cable package they can charge more for advertising.

It’s a big enough perk that the Sun News Network, once they discovered that Canadians weren’t interested in paying extra for “Fox News North”, demanded to be included in the mandatory carriage list. That failed, and they went under amid a lot of mocking over a right-wing channel demanding government intervention to protect them from the free market.

carlb (profile) says:

Re: Re: Re: Local Antenna TV

As far as I know, CKXT-TV (the terrestrial station which was simulcasting “Sun News” into Toronto, Hamilton, Ottawa, London) returned its licence to the CRTC and left the air because the broadcast regulator objected to the same content being on both a speciality channel and an OTA channel.

The pay TV version of “Sun News” ran for a little while after CKXT-TV folded, but was eventually abandoned.

Certainly, the precedent is unfortunate because “siphoning” – the process by which content, ad revenue or viewers which would have been on OTA TV were there no cable are being taken away from OTA, slowly killing it – is already a problem and shutting down an OTA outlet to prevent the broadcast of a continuous “news” format (however biased) only makes this worse.

Anonymous Coward says:

Re: Local Antenna TV

“I project that in 10 years local (in this location) Antenna TV will be a thing on the past. “

What is this prediction based upon? Several reports show the number of OTA viewers is increasing not decreasing. With the future of the economy not looking so good for the working class, how will they afford the ridiculously expensive pay tv crapfest?

Do you have a stake in the pay tv business?

carlb (profile) says:

Re: Re: Local Antenna TV

Whether antenna TV “will be a thing of the past” really depends on where you live.

The UK has “Freeview” which technically really isn’t free (as there’s a burdensome annual “licence” tax just to own a TV receiver) but which provides in unencrypted digital OTA a bundle of DVB-T content which viewers in other countries often have to pay a cable or satellite provider to receive. This includes content such as 24 hour news channels.

The US has “retransmission consent”, a system in which individual stations broadcast a limited amount of network programming OTA for free, then charge cable TV companies actual money to receive this same programming for resale. Every once in a while, a pricing dispute between a TV network and a cable or dish company results in one or more channels temporarily blacked out while the respective vendors squabble. The final price is confidential so, while the feuding parties blame each other, the public has no way to assess who’s to blame.

Canada is a mess in which the pay TV operators (Bell, Rogers and maybe Vidéotron in the east and Shaw, Telus in the west) have been systematically buying up all of the content, generating a duopoly instead of a competitive marketplace. The terrestrial TV stations are therefore now owned by huge corporations with a vested interest in seeing terrestrial TV fail.

The CBC/Radio-Canada public network used to be the one bright spot in this otherwise-dismal picture, but it shut down all rebroadcaster transmitters in cities where it doesn’t have an originating studio in 2012 and it threw its few remaining affiliate stations (like CHEX/CKWS in Peterborough/Oshawa/Kingston) under the bus in 2015.

The end result? Every Newfoundland outport (ie: anything except the Avalon Peninsula, which contains the capital St. John’s) has no antenna OTA TV at all. Nothing but static. A few major cities (like Toronto and Montréal) might still be viable OTA, but even then there are issues with trying to receive the US ABC network in Mtl. because it moved co-channel to a Trois-Rivières station after the digital transition and is underpowered to protect the existing site.

If I’m sitting in the 1000 Islands region, on the Ontario-New York border but just far enough to lose Ottawa/TO/Mtl. the results are telling. A digital channel scan presents me with ten A-grade strength subchannels for various networks from Watertown NY (pop 27000), seemingly everything but NBC (which is on a low-power station which doesn’t quite make it to Sackets Harbour). I can’t get anything from Canada except CTV, a privately-owned network (owned by Bell) which duplicates huge chunks of programming already available from the ABC affiliate. An utter waste of time.

Why the difference. Kingston ON (pop 123780) is in theory bigger than Watertown, but the selection is ten times worse because of a long-running series of bad decisions made by the Canadian Radio-TV Telecommunications Commission, aka CRTC (Commission for Repression and Thought Control). This commission is a nightmare of regulatory capture and revolving-door appointments. It protects Bell and Rogers from each other; it doesn’t protect the public. It overregulates OTA digital TV to the point where broadcasters can’t add subchannels with unique content without applying for a separate licence for each – so none do so. It allows existing stations to oppose licence applications for new stations, so a market with one existing station is either consigned to a one-channel universe or forced to turn the antennas to outlying stations (um, who am I kidding, just point the stupid thing at Watertown NY and leave it there – it doesn’t need a rotor anymore, OTA TV here is so bad). Any attempt to make cable companies pay or subsidize the cost of keeping OTA TV alive dies because those stations are owned by cable and dish companies who want OTA TV to die.

The end result serves a few large corporations well, but harms the public irreparably. The only thing worse is the Mexican system, where two companies own basically everything – of the seven VHF TV stations in Mexico City before the digital transition, four were Televisa, two were Azteca and the only other choice was an educational channel (11) from the Polytechnic Institute. When two companies own everything, they can slant news coverage, change the outcome of entire elections through their monopoly or duopoly on public opinion and discourse and basically destroy democracy.

This would appear to be the model the CRTC aspires to? The US is awful, but things could be much, much worse.

Anonymous Coward says:

repeat of record industry vs consumers war

In many ways the cable industry is repeating the same mistakes as the record industry two decades ago, believing that customers would forever submit to expensive bundling against their will, despite the new reality of a rapidly changing digital marketplace that allowed consumers, whether legally or not, to get their desired content exactly as they wanted, without all the excess baggage.

And as with the record industry, it looks like the only way to make the cable industry start giving consumers what they want is by hurting them in the wallet.

Great_Scott (profile) says:

Re: 60% in 2030?

That’s not the only strange thing that they’re saying.

So, the idea is that when Millenials buy houses they’ll subscribe to cable?

Well, they won’t be subscribing to cable for anything except Internet access in any case, but how is a group of people drowning in student debt and childless because of lack of steady income going to get a mortgage?

(This is a subset of the “FU, Pay Me, except people under 30 literally can’t afford to” argument that’s going to apply to more and more things in the future)

Anonymous Coward says:

> in the false belief that the traditional TV cash cow they’ve been milking for decades is somehow immortal

I don’t think I would jump to that conclusion. I’m guessing they have studied the issue and have concluded that for now, the legacy system is still the most profitable while switching over to an unbundled, internet-based system is only getting easier and cheaper each year.

They will keep shedding customers and at some point it will be more profitable for them to change course and I’m guessing that’s when they will do it.

ANON says:

What it is...

Other than live events, carried live – sports, news, special events like concerts – there is no reason for TV. We will eventually end up with nothing but ESPN, CNN, and Netflix.

The only drawback is that the major studios and the bigger networks have decided that exclusivity is important. If you don’t subscribe to HBO or whatever, you will have to watch shows live on CBS, NBC, etc. You know we have arrived in the new century when we have more of the bookstore model (remember bookstores?) Whatever your streaming service, you can watch the shows you want to watch. And shows will be liberated from the half-hour/one-hour TV format and the 2-hour cinema format, to run as random length episodes suitable for episodic watching or all-day binging.

TimK (profile) says:

We just cut the cord last week. I’m a 40-something living in my own house with a wife and 3 kids. Paying $180/mo for internet/phone/TV was just absurd. Probably $40 was BS fees and box rentals. Dropped to a 100/100 internet only plan plus PS Vue TV. Picked up a couple of Roku’s on Black Friday and we are all set. $100 up front equipment cost and $40/mo internet and $45/ Vue TV. We will save $100/month and not really lose anything of note. Maybe comedy Central and another non-critical channel. So far so good.

Anonymous Coward says:

Re: Re:

The only thing that keeps my house from dumping cable is live sports.

We pay $130 / year for streaming baseball and $140 / year for hockey and keep a basic cable subscription for football and for baseball games that are blacked out on

We also subscribe to Netflix, Hulu, and HBO.

We don’t watch a lot of TV, but everything is incredibly silo’d. I kind of wish I could just pay $2-$3 / hour and watch anything I want.

Anonymous Coward says:

I grew up in an area that didn’t have cable TV service. So what I watched was OTA or later on, VHS.

Flash forward, and the only place my kids have seen “live TV” is in restaurants. To them, “watching TV” means pulling something up on YouTube or some other streaming service, or watching something off the NAS at home. I have no idea how a TV exec is going to convince them (post-millennials) to buy in to cable TV. What exactly does it offer them other than a layer of inconvenience?

The Wanderer (profile) says:

Re: Re: Re: Re:

Would you care to explain what that way is, and what the regulations preventing it from (so to speak) "going live" are?

Note that by "a way to handle it", I don’t just mean a technical solution, which is indeed certainly already known; I mean something that encompasses the entire structure, from the technical details to the economics of it all to the licensing aspects to probably other things I can’t focus in on right now – the whole shaboozle.

If nothing else, the economics of having people sitting there behind a news desk waiting to provide commentary on whatever comes along as soon as it happens don’t seem easy to work out for something without the economic might of something like the cable behemoths. And while having people doing that has downsides (the constant pressure to give coverage to things that really shouldn’t be newsworthy, just because there’s nothing better to cover at the time, for example), I’m not sure I see any other way to make sure that you have people available for real-time commentary at any given moment.

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