A Blog by Jonathan Low


Mar 11, 2017

The Cord Cutting That the Cable Industry Says Isn't Happening, Keeps Happening

So it's come to this: after years of ignoring consumers' complaints about monopolistic pricing, cable companies are now offering discounted cable offering, some, in effect, proffering free cable service for those who buy the companies' more profitable broadband services.

The reason is that consumers are cancelling their subscriptions in favor of web-based alternatives that allow them to pick and choose what they pay for.

This whole free market thing is quite a concept... No wonder established businesses hate it. JL

Karl Bode reports in Tech Dirt:

2016's 1.7% decline in traditional cable TV viewers was the biggest cord cutting acceleration on record: Comcast and ATT have eke(d) out small gains in cable TV customers by leveraging their broadband monopoly and giving TV services away on promotion. ESPN, the poster child of cord cutting denial will offer stand alone streaming services (following) a new round of layoffs to counter millions of lost subscribers - around 10,000 subscribers per day
For years, we've noted how many cable and broadcast executives have decided that their best reaction to the growing threat of cord cutting is to bury their head in the sand and pretend it isn't happening. Some industry executives like to insist that cord cutting remains an unimportant trend that will magically disappear once more Millennials begin procreating. Others -- often with help from the press -- like to insist the idea of cord cutting is some kind of myth perpetrated by mean bloggers, just to ruin everybody's good time.
As a result, too many in the cable and broadcast industry have decided that the best response to a changing TV marketplace is more of the same: more rate hikes, more advertisements, more tone deafness, and more denial.
You may be shocked to realize that this isn't working. In fact, MoffettNathanson analyst Craig Moffett, the telecom industry's top media quote machine, pointed out this week that 2016's 1.7% decline in traditional cable TV viewers was the biggest cord cutting acceleration on record thus far:
"With the results now in from all of the largest operators, it is clear that cord-cutting of legacy distribution services—that is, without including OTT-delivered virtual MVPD bundles like Sling TV and DirecTV Now (and soon, YouTube TV)—has at last meaningfully accelerated,” Moffett said. “While there admittedly remain a few smaller operators left to report, the pay-TV business (as defined by traditional providers) ended 2016 shrinking at 1.7% per year, its fastest quarterly acceleration on record."
Companies like AT&T and DirecTV have "solved" the problem of cord cutting by rolling subscribers of their streaming TV services (DirecTV Now and Sling TV) into their TV subscriber totals, hoping you'll ignore that these users pay significantly less for service than their traditional TV counterparts. Other companies, like Comcast, have actually managed to eke out small quarterly gains in cable TV customers by leveraging their broadband monopoly and effectively giving TV services away on promotion -- a short-term fix.
But the train is rolling all the same. ESPN, the poster child of industry cord cutting denial, only just recently acknowledged it will finally crack and offer the kind of stand alone streaming services it spent years claiming weren't viable. The company's also gearing up for a new round of layoffs to help counter the millions of lost subscribers (due to cord cutting and the rise of pared-down "skinny bundles"). It's estimated that, at this juncture, ESPN's losing around 10,000 subscribers per day -- the lion's share of which are paying too much money for content they don't watch.
As always, you'll have a good idea that the era of cord cutting denial is over when cable providers truly begin competing on price when it comes to their traditional cable TV offerings. Right now, however, the overarching name of the game for the sector is to insist that this cataclysmic shift the industry is experiencing is just a temporary phenomenon that needs riding out -- and not, as the truth should make clear, genuine adaptation.


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