Cord Cutting. Myth or Reality?

Cord Cutting

I am a cord cutter. I admit it. I’m not ashamed of it. I’m personally saving hundreds of dollars per month. There’s no looking back. Well maybe. Before I get into it, let’s look at the industry in general.

Over the past decade, the dynamics of Television and Video delivery have changed dramatically. Linear TV has transformed. OTT is becoming more relevant. Netflix is an industry giant with 70 million subs, 40 million in the US. Comcast purchased NBC, and even Apple is in the TV business, well sort of.

But what is this phenomena called cord cutting? Which cord is actually being cut? In this case, it’s the cord to the Cable Company for pay TV service.

There is no doubt that the Cable/MSO’s are transforming. There was a time that they offered only TV service. However, with the advent of Broadband, they are actually at a point whereby there are more broadband subs than Video subs. A dramatic point has been reached in which MSO’s are no longer just offering TV, but are full-fledged service providers.

Over the last few years, the critics and pundits have announced the death of subs paying for Video service from the MSO’s. They indicated that people were cutting the cord at lightning speed and that very soon there would be no Video subscribers for the MSO’s. It’s true that more and more people are cutting the cord, but recent research from Leichtman Research Group (LRG), shows that the top Cable MSO losses for 3Q2015 were the fewest in any quarter since 2006. Also, the top nine cable companies lost about 145,000 Video Subscribers in 3Q 2015 – compared to a loss of about 440,000 subs in 3Q 2014 and a loss of nearly 600,000 in 3Q 2013. In fact, the top Cable MSO’s cumulatively lost 1.3% of video subs over the past year, compared to 2.6% over the prior year. Not the massive exodus predicted, but a figure that should not be overlooked. Another consideration in the debate, is that according to LRG, 13% of households get a broadband internet service, but do not subscribe to a pay-TV service. 68% of households get both broadband and pay TV services.

As I stated earlier, I am a cord cutter. Have been for years. Although I am very happy saving a few hundred dollars a month, there are some drawbacks, and I think the average consumer is still confused on how to cut the cord. Before you do, consider the following barriers.

The first is around content. Cord cutters in my opinion are not just subscribing and watching Netflix. From an OTT perspective, people are also subscribing to Hulu, Amazon Prime, HBO, SlingTV and various other services. People also want local content such as news, the major broadcast networks, and of course sports. To incorporate these, an HD antenna is required. These are not your grandfather’s antennas anymore. You can now get a very small form factor HD antennae such as the Leaf, and others. They can mount virtually anymore, and even can be painted if necessary to match the paint on your wall. However, I believe the average person doesn’t know they can get free HD channels with very high quality. Then, there is the confusion of how to connect it to the TV and which “source” input should they use? How does this work on multiple TV’s? Multi room? How do you record content you want to view? There are some companies with good DVR type recording systems, such as TabloTV, but I find there isn’t an totally integrated solution, yet.

Let’s assume you’re tech savvy, and have this all figured out. You have an HD antennae to get local content and the major networks, you have Netflix, Hulu, HBO and Amazon prime. Now you want to watch the local sports game being broadcast on a major networks sports channel. Denied! It’s not on the local HD channels, it’s not on Netflix, Hulu, HBO etc. There is no “app” that can be downloaded to watch it, and the website doesn’t let you view it. You could subscribe to the NFL Network, MLB TV or NHL TV. However, the game may be blacked out because it is being shown on one of those sub sports networks. If you were a cable subscriber, you could watch it.

What about the skinny bundle? There is a lot of discussion around the skinny bundle. A skinny bundle would allow the MSO to offer a subset of local channels and a few other channels at a much reduced price. However, there is some hesitancy to offer this. I believe that eventually the MSO’s will offer this bundle due to regulatory pressure. Time will tell.

So is cord cutting a reality or a myth? I’ll let you decide.