Another Look at Cord-Cutting: How Big Is It?
Earlier this week, I examined the recent coverage of the “cord-cutting” phenomenon. What I wanted to do was look at two questions:
- Can you really replace your cable service with just online video?
- At the present time, is this really a widespread phenomenon?
On Tuesday, when I addressed that first question, I came to the conclusion that it would be difficult to replace all the programming accessible through multichannel video by just relying on online sources. Now it’s time to look at the second point. As I suggested previously, it’s helpful to read our previous posts on cord-cutting:
- The Roles of TV and the Internet
- More Cord-cutting Coverage
- Should All Content Be Online for Free?
- Are Stories of Cable “Cord Cutting” a Myth?
How Significant Is the Phenomenon?
In my last post, I noted that the perception is that tons of television content are available for free online, but the reality is that this is not completely true for cable programming. It’s also true that, in some circles, there is a perception of large numbers of consumers fleeing cable (e.g., “Cord cutters flocking to online TV at the expense of cable“), but the reality is quite different.
Yesterday, CTAM released a new study entitled Crossing Over: Understanding Viewer Multi-Screen Migration, based on research conducted by The Nielsen Company. The media release for the study says, “The study identified eight distinct broadband user segments, determined by their levels of engagement with video content across TV, online and mobile platforms, the devices they used to consume content and their motivations for and attitudes toward using multiple platforms. ” About 8% of broadband users are identified as belonged to the group “Extreme Techies;” these people are identified as technology innovators and are the most advanced group in their consumption of online video.
How much do the Extreme Techies watch online? As noted in this Hollywood Reporter article on the study, they watch “up to 91 minutes (1.5 hours) per week, compared to the mean of 44 minutes.” That’s it. Overall, 58% of TV viewing time is spent regularly scheduled programming on a television; 20% through use of a DVR; and 6% for online video.
You might think that really young people would skew differently, but a recent survey conducted by analyst Bruce Leichtman found otherwise:
In a nationwide survey of 1,250 broadband households and separate sample group of 250 teens aged 12 to 17, Leichtman found that only 8% of respondents watch repurposed TV shows online, compared to 24% that watch news clips, 20% who view user-generated clips on YouTube and 15% that watch sports news or highlights.
The title of Leichtman’s report? The Phenomenon That Isn’t.
You might have also read about a recent Nielsen Three Screen Report shows that people are still watching TV, on a television set. Or you can check out this SNL Kagan chart on video subscriptions and notice that there doesn’t seem to be a significant decline in people subscribing to cable service. There was a Craig Moffett report written in February that said, “The Fourth Quarter of 2008 may someday be remembered as the quarter when video cord cutting… didn’t happen.” Or you might use your common sense and notice that we live in a time when sales of big-screen hi-def TVs and HD content is on the rise. You might then ask why you’d want to watch all your video on a laptop or a 24″ computer monitor instead of on a high-definition television.
And yet there was also a WSJ story yesterday: More Households Cut the Cord on Cable.
Quote One:
In what’s shaping up as the home-entertainment equivalent of severing a landline phone service, more people are joining the ranks of “cord cutters” by forgoing cable subscriptions that can run $60 or more a month.
Quote Two:
The number of cable cutters remains too small to threaten the pay-television industry.
Quote Three:
Those who end up cutting the cord do pay a price in entertainment. Pay-TV services, like cable and satellite, still carry more live events, TV shows, movies and other content for viewers to watch than what’s available online. Web TV also doesn’t offer as much high-definition content as pay TV… Some would-be cable cutters have pulled back at the last minute, in part because live events like sports are hard to find online.
I think Will Richmond summed it up nicely in the title of a recent blog post: Video Behavior Changes Suggest “Evolution,” Not “Revolution” For Now.
As I mentioned last time, online video is a wonderful thing. If you only watch broadcast TV or if you only watch a few shows, then cord-cutting may be the perfect solution for you. Otherwise, it seems more like a complement to some kind of multichannel video subscription. For robust delivery of high-quality programming to a lot of simultaneous viewers, cable is hard to beat.
For more on this issue, see recent articles from Aaron Barnhart (”Cord-cutting is an urban legend … for now“) and Carol Wilson (”Cable cord cutting debate rages on“).
Tags: broadband video, cancel cable, cord-cutter, dump cable, online video
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May 29th, 2009 at 12:33 pm
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May 29th, 2009 at 3:03 pm
Cutting the cord will happen much quicker than the incumbent reactive cable companies would want you to believe. We have gone from how are we going to get to 500 channels of programming with little content to distribute to the end users to an over abundance of content and a form of distribution that will allow for all this content to be made available to the end users. Techies supported cutting edge satellite technology when introduced leading to a major player in DIRECTV and will continue to support the transition to streaming video to the HD televisions more and more households have in place.
May 30th, 2009 at 9:38 am
Of course, massive “cord-cutting” isn’t here yet.
But over the past year or two, all the pieces to allow a massive shift to happen have come into place:
–widespread availability of much (admittedly, not all) “high value” broadcast content, either for free or ‘a la carte’;
–broadband connections fast enough to stream this content in acceptably high resolution (greater than SD if admittedly not 720p/1080p); and
–an explosion of consumer devices that allow such streaming, directly to a real TV, without extensive technical hurdles (i.e., low dork factor) (TiVo, Apple TV, boxee, BluRay players with built in NetFlix streaming).
What was it that caused huge numbers of people under 30 to stop paying for landline service and rely on their cell phone? Cell phones still don’t have the same reliability that land lines do…. And did it happen all at once, in one quarter? I don’t know, but I don’t think it was that dramatic.
One question regarding your statistics: do they reflect the numbers/percentages/times that respondents watched video on their computer monitors? Or do they also include in their numbers video watched on a primary TV that was delivered over the public internet to a set top box? Because it is the latter, rather than the former, that I think is the relevant and transformative phenomenon.