Commentary

Pay TV Dilemma: Cord-Snippers, -Shavers, -Nevers

The rise of cord-nevers is a real threat to the pay-TV industry, but the number of cord-cutters is growing, too.

Similar findings from two research firms illuminate the changing nature of consumers’ relationship with their cable cord. For starters, Parks Associates reports that 10% of U.S. broadband homes have snipped the cord to cable TV, with 25% having done so in the last 12 months.

These cord-cutters are using online video resources to get their entertainment fix instead. Parks also found that another 7% of broadband homes have downgraded their multichannel video service in the last year, making them “cord shavers.” Meanwhile, another 3% are “cord-nevers.” Those are consumers who have never subscribed to pay TV but do rely on streaming video.

In related news, Forrester Research reported that converting those cord-nevers into customers will be a daunting prospect. The research firm said that by 2025 about half of U.S. adults under 32 won’t pay for cable TV.

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Multichannel providers are bulking up their TV Everywhere offerings, and may be able to keep some of these customers with such fare, but broadband is becoming the more valuable service for providers, since it’s enabling the streaming alternatives that are rising in popularity.  EMarketer recently reported that the three dominant OTT content services – Hulu, Netflix and Amazon — are all on pace for rapid growth in the next few years. 

 

5 comments about "Pay TV Dilemma: Cord-Snippers, -Shavers, -Nevers".
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  1. Leonard Zachary from T___n__, October 14, 2015 at 12:29 p.m.

    payTv bundles, retransmission fees (government mandated coporate subsdies that are not Free Market) and Advertising sold on the currenr ratings system are not part of the Future

  2. Todd Koerner from e-merge Media, October 14, 2015 at 1:38 p.m.

    The question continues to be - How will sports, awards, and other live events be delivered in the future? Will MLB.com and NFL.com assert their copyright control once they can monetize beyond traditional TV? What about MPAA and the Hollywood Foreign Press Association for the Oscars and Golden Globes?

    That's where the real money is to be found.

  3. Ed Papazian from Media Dynamics Inc, October 14, 2015 at 3:48 p.m.

    It doesn't matter, Todd. No matter how they are delivered, someone will post such content on YouTube and everyone will watch it there for free. Of course, one has to wonder why any platform would pay for the rights to cover and offer sports and other "premium" content to subscribers if everyone refuses to pay for it and waits, instead, for it to show up first on YouTube. In other words, which comes first, the chicken or the egg?

  4. Leonard Zachary from T___n__, October 15, 2015 at 11:33 a.m.

    The price of Sports Programming lives in a Bubble in the U.S.

    The ESPN model of having 100M cable subscribers pay for content they don't watch has inflated the price significantly beyond what the Free Market will bare.

    Add fuel to the fire when you look at what US Sports programming fetches in the China market, pennies on the dollar.

    If you supply content at the true market value and the proper value proposition, people would buy it.

  5. Ed Papazian from Media Dynamics Inc, October 15, 2015 at 1:06 p.m.

    Leonard, a lot of people watch ESPN. For example, according to MRI, approximately 29-30% of all adults watch one or more ESPN shows on a weekly basis and many more are reached over longer periods of time. Translated into households this channel probably reaches half or more of the country's homes, though, obviously, the reach of any individual "telecast" is much smaller. So it's not right to claim that 100 million homes are forced to pay for a channel that they don't watch.

    On the other hand, I tend to agree with you regarding the need for changing business models in the TV content distribution business. As things develop, I can see a gradual but significant trend by the major players--the TV networks and some of the cable programmers---towards much less reliance on advertising dollars and more on paid subscriptions. For example, I can imagine a time when a TV network---or a consortium of networks----offers "quality" dramas, sitcoms or other "primetime" fare , probably orgainzed thematically, first to paying subscribers---without ads. Later, the same shows would appear as reruns on the reqular, ad-supported and "bundled" platforms, which cover 98-100% of the nation's TV homes. Still later, these shows would become syndication rerun fodder, being recycled endlessly on ad-supported Independent TV stations and  cable channels as well as  network owned SVOD services like Hulu. The reruns are where the real profits would be made.

    The result of this evolution would be diminished opportunities for advertisers to buy time in "premium" content, as, by the time it became available to them via the networks' regular, bundled, platforms, these would be reruns, not highly merchandisable "originals". Consequently, their "buzz" factor would be almost nil and the advertiser would be buying eyeballs on such shows as if they were commodities, with low rated, targeted "mass" audience tonnage being their main value. The same would apply to subsequent, syndication exposures---with still more reruns and even lower ratings---advertisers would get national coverage and buy "impressions" but that's all. This way, the networks would retain their "bundled" coverage platforms, but now, they would fund "quality" as well as other shows using two revenue streams. 

    Finally, as to Sports, the problem is that much of it is time sensitive. Reruns aren't going to work so I would think that the current, bundled approach, perhaps modified to operate on a sport by sport basis, might work. In other words, if you only like baseball, you subscribe to that service; if you are a football -only fan, you do the same, etc. If you prefer baseball and football, there's a deal for you, too. The trouble with this is that sports like hocky, tennis, golf, etc. might not be viable on their own and woulld bave to be bundled together in some fashion.

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