The Tipping Point for Subscription Fees?

[aa9vi]

Nearly 800,000 U.S. TV households 'cut the cord,' report says

Make no mistake: The big cable, satellite, and telco carriers are still sitting pretty with more than 100 million TV subscribers. Nevertheless, a new report claims that more and more viewers are "cutting the cord" in favor of watching their favorite shows via over-the-air antennas (remember those?), Netflix, or the Web.
TechCrunch has the scoop on a new report from the Toronto-based Convergence Consulting Group, and though the figures may not be a "serious threat" to the big cable and satellite carriers yet, the trend might eventually spell trouble for the like of Cablevision, Comcast, DirecTV, and Time Warner Cable.

To wit: Nearly 800,000 households in the U.S. have "cut the cord," dumping their cable, satellite, or telco TV providers (such as AT&T U-verse or Verizon FiOS) and turning instead to Web-based videos (like Hulu), downloadable shows (iTunes), by-mail subscription services (Netflix), or even good ol' over-the-air antennas for their favorite shows, according to the report.

Now, as TechCrunch points out, the estimated 800,000 cord cutters represent less than 1 percent of the 100 million U.S. households (give or take) currently subscribing to a cable/satellite/telco TV carrier, so it's not like we're talking a mass exodus here. But by the end of 2011, the report guesstimates, the number of cord-cutting households in the U.S. will double to about 1.6 million, and if the trend continues, well...

Even more trouble for the big carriers is the report's assertion that U.S. TV watchers are getting a taste for online video, with an estimated 17 percent of the U.S. TV audience watching at least one or two shows online in a given week last year, up from just 12 percent in 2008, and set to rise to 21 percent this year.

Personally, I find the temptation to cut the cord pretty enticing, especially whenever I get a load of my monthly $130 cable bill (which includes unlimited broadband and HD but no premium channels). Why am I paying so much for all the hundreds of channels that I rarely ever watch, anyway? Wouldn't it be easier — not to mention a lot cheaper — just to ditch my DVR and watch my favorite shows on iTunes and Hulu, catch up on the news via CNN.com, and be done with it?

There's one important factor that's keeping me from pulling my scissors out: live sports, and particularly ESPN, my 24-hour sports companion. Sure, as a football fan, I could keep up with the Jets and the Giants via over-the-air TV (although I'm not sure my landlord would be all that ecstatic about my installing a TV antenna on the roof of our Brooklyn brownstone), but without cable, I'd be left high and dry when it comes to Monday Night Football.

What about you? Anyone out there count themselves as one of the 800,000-plus cord-cutting households in the U.S.? If not, would you ever consider it, or are you too attached to basic cable?
Correction: This post originally said that 800,000 U.S. TV households "cut the cord" in 2009. They didn't all cut the cord in 2009; the number reflects how many had cut the cord by the end of 2009 — a somewhat important distinction. Apologies for the goof.


Nearly 800,000 U.S. TV households 'cut the cord,' report says - Yahoo! News

 

[glnrcg]

very interesting indeed

 

[Kheldar]

Hulu won't be free forever:

Hulu to start charging in 2010

 

[harshness]

Hulu has been sending up these trial balloons for a long time. At least twice a year, it comes up.

I believe they are waiting for people to get tired of whining about it and at that point, they'll start charging.

 

[Big Dawg 23]

Enough folks cancel and Cable and Telco will put on Strict low usage caps if you are not a TV subscriber. Directv and Dish will be stuck. Also not enough have the sense on how to stream to a TV.

 

[riffjim4069]

IMO, any programmer that accepts ad dollars should be prohibited from charging any cable/satellite/telco for retransmission. After all, that's why they sell ad time. Additionally, all non-ad programming should be purchased a la carte by the consumer. This way the consumer is allowed to decided what programming they wish to purchase, and now much they are willing to pay. Finally, the FCC needs to mandate an "gateway" device based on open-standards that will be placed in the customers homes so they can purchase set-top-boxes of their choosing (this applies for cable, DVS and the Telcos).

 

[dcowboy7]

Alot of peeps cancelling are the low end custys that werent spending alot of $$ anyway.

 

[joed32]

Alot of peeps cancelling are the low end custys that werent spending alot of $$ anyway.

Probably a lot of people who lost their jobs canceled as well.

 

[cfb]

Unfortunately, if this trend continues it'll end up a lot like the current newspaper situation. If people stop subscribing to large block channel packages and just try to get a couple of shows for free on hulu or with ads OTA (skipping those with a dvr), there wont be any money for content production. Plus most of the secondary channels will bite the dust.

So like with the newspapers (who do most of the serious reporting) dropping dead, we'll end up with a lot less to watch and it wont be as good. Reality shows, opinion shows, cheap junky crap that doesnt cost anything to make, has no real stars, has no actual writing.

Hmph...we might be halfway there already...

 

[Stargazer]

This could end up being something like the Vonage / Magic Jack of TV. A lot of people only watch a handful of channels and if they can get that content online even if they paid the content provider it would save them money and be on demand at all times as long as it is made available online.

If online places like Hulu start charging then there will be far fewer subscribers to that service and may not even survive. Free service that is ad supported is the only way most would purchase such a service online unless they offer similar content in the way of channels/shows on those channels and at a competitive price.

The number of people that start doing this had to start from somewhere and this is where it is starting and will only increase from here. I personally believe that a lot of the content has went to crap on many if not most of the channels (filler content and so forth) compared to years ago although some channels do have really good content. This would help services like Hulu.

 

[Joe Diamond]

Probably a lot of people who lost their jobs canceled as well.

As a Directv installer (not real active) I get inquiries from the low end cx faction who never moved beyond the 18" dish & Hughes box. They go something like..."You installed my service back in 1998 and it worked until the day I called to shut it off. Is there any way you can reconnect me without Directv finding out?

They came into the world clueless and will leave that way.

The functional but jobless professionals just started cutting. Satellite service, music lessons for the kids, country club dues & membership, HOA dues, pets...want a horse?....yacht costs...want a sailboat? Want a second or third home? They know what they need and what the unnecessary frills are.

Joe

 

[Aridon]

Streaming services like Netflix are a glimpse into the future of content distribution. The current model isn't going to go away anytime soon but over another 10 years or so I think you are going to see a huge shift to a la carte style programming or even far cheaper all you can eat packages (like netflix 9.99 streaming).

The days of needing a program guide and DVR are slowly going the way of the Dodo. On demand is the future and its very likely to shake up the satellite market far more than the local cable co / Uverse.

 

[cfb]

Online content distribution may be the future, but someone is going to have to come up with the internet bandwidth to support it if a lot of people go in that direction. And bandwidth caps are going to have to go WAY up.

On the other hand, there'd be all that cable tv wire and satellites with lots of reusable video bandwidth and declining customer bases.

So maybe the cable, telephone and satellite companies will go more away from selling us video services for $100 a month and end up charging us $100 a month for internet service.

 

[Stargazer]

It will force many companies providing broadband to upgrade their networks to support additional speed and bandwidth.

 

[Ken S]

Online content distribution may be the future, but someone is going to have to come up with the internet bandwidth to support it if a lot of people go in that direction. And bandwidth caps are going to have to go WAY up.

On the other hand, there'd be all that cable tv wire and satellites with lots of reusable video bandwidth and declining customer bases.

So maybe the cable, telephone and satellite companies will go more away from selling us video services for $100 a month and end up charging us $100 a month for internet service.

For very high end internet service (20GB+/20GB+) I would much rather pay $100/month than that or more for just TV. Over that net connection I can handle all of my communication needs (Phone, email, messaging, etc.), Entertainment, and data.

Standalone TV services are facing the same future as landline phones. About 15 years ago an engineer for Bell Labs wrote an article on the death of the "smart" network...surprising Bell Labs released it and he was dead on.

Put simply a smart network is one that is dedicated to a single type of communication/data (land=line phone for instance).

The cable/telcos will have to shift their business models to survive...the satellite guys are in for a real challenge down the road...similar in many ways to what AOL faced when broadband became a reality. It doesn't happen overnight, but as with everything else in technology it usually happens far faster than you think. Satellite will never go away though...there will always be places that can't get sufficient cable/telco/wireless service to support a high-quality entertainment package.

There's also a business reason for this from the content producer's point of view. HBO can now look at selling through DirecTV and getting somewhere around 40% of the gross price...or selling their service directly to subscribers over the internet for less and keeping all of the subscription fees. The "middle man" has to always stay nimble or get squeezed out.

 

[DerekE]

I actually did this on the Dish Network side. Got Apple TV but realized it wasn't anywhere near what I was looking for, at least not yet. Once it becomes more of a priority for Apple and less of a hobby (their words not mine) I'll consider it. For right now I'm close to giving up on sports completely, I'm still following baseball (MLB at Bat 2010 for iPhone) but we'll see if that lasts beyond this season, and nothing else I follow even remotely as close as I did before.

I'd also like to see what services become available for a device like the iPad once I get one. I could be happy using that for my TV/Movie purchases from Apple instead of another box.