Photos from the Cable & Telecommunications Human Resources Association's annual Symposium and Awards Luncheon, held in Atlanta on May 2.
Cord-Cutting: Wishing Doesn't Make It So
Lots of people aspire to being “cord-cutters.” There’s an undeniable populist yearning to want to stick it to The Man for the evil of forcing them to pay “too much” money for TV news and entertainment.
But how many have really done it, instead of just wishing they have?
Some data on this topic is questionable. For example, according to a Cowen & Co. survey of 1,200 consumers released this week, about 23% of Netflix subscribers claimed they have canceled pay TV service.
Wow. Really? As of the end of 2012, Netflix had 27.1 million U.S. streaming subscribers. That would mean some 6.2 million consumers have canceled their pay-TV service since Netflix launched its Internet streaming service, if the Cowen & Co. survey squares with reality.
Now, as of Q3 2012, Nielsen estimated there were 5.3 million households with broadcast-only TV and broadband, as well as around 3.75 million with neither over-the-air or pay TV but with television sets. So that gives you in the neighborhood of about 9 million potential non-pay-TV homes that could be Netflix streamers.
Is it likely that more than two-thirds of those homes both (a) canceled pay TV service in the last few years and (b) are currently Netflix subscribers?
It’s technically possible but seems implausible. Also consider that the pay TV sector showed its first net decline in Q2 2010, according to SNL Kagan. From Q3 2010 to Q3 2012, the MVPD universe shrank by about 1.8 million homes, from 104.6 million to 102.8 million, Nielsen estimated.
So, if the industry to date has lost more than 6 million subs to Netflix alone, you would have to assume that MVPDs have also picked up at least 4 million brand-new subs to offset that loss.
More likely, what's going on is the age-old phenomenon of people saying one thing and doing another.
After I questioned the Cowen & Co. survey, Jim Partridge, NCTA’s VP of industry and technical analysis, pointed out a story I wrote more than two years ago: Survey: 22% Cut Back on Cable to Save Cash, citing a Harris Interactive poll conducted in October 2010 finding that 22% of consumers surveyed claimed they downgraded or eliminated their cable-TV service in the prior six months. As Partridge noted, in 2012 premium TV services actually grew: HBO/Cinemax added 1.9 million U.S. subs while Showtime added 1 million.
Similarly, see: this CEA survey conducted in December 2010, which found 10% of pay TV subs said they were “likely” or “very likely” to cancel service in 2011; and this Deloitte survey in which 9% of pay TV subscribers claimed they cut the cord in 2011.
Are there real, honest-to-god cord-cutters out there? Yeah, sure. But there also seem to be a bunch of folks who are lying about it because they like the idea of dropping traditional subscription television service. And that's obviously a perception issue about the value of pay TV that the industry must address.
P.S. For a totally different kind of TV cord-cutter, check out this interesting piece in the New York Times today about a popular -- and controversial -- Norwegian show about... firewood.
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