Monday, December 6, 2010


What is old is new again, especially with a tight economy. Consumers are rediscovering the rabbit ears, although this time it is to receive digital broadcast signals. "Some viewers who have decided that they are no longer willing or able to pay for cable or satellite service, including younger ones, are buying antennas and tuning in to a surprising number of free broadcast channels. These often become part of a video diet that includes the fast-growing menu of options available online."

Yes broadband is more important to the consumer than cable programming. And because of Hulu, Netflix, and other web video providers, there is satisfaction with the choice. To compensate, Time Warner has built a new tier at a lower price, offering connection to broadcast and some inexpensive basic cable channels. A downgraded customer is better than one that leaves entirely.

In a separate article in today's NY Times, ESPN conducted a study that proved that cord cutting was not a problem. "The research comes from the same sample that Nielsen uses to project TV ratings. Nielsen verified ESPN’s findings. Similarly, data from the research firm SNL Kagan found that 119,000 customers dropped their cable or satellite subscriptions in the third quarter of this year. There are about 100 million subscriptions nationwide."

Except, look deeper into the analysis, and perhaps there may be a concern. Today's consumers are leaving cable, for telco and satellite. Why? I imagine that their competitive pricing is lower. For networks like ESPN, a sub lost to cable is gained at telco and satellite growth. Subscribers will gravitate to better value. And as TV manufacturers and gaming platforms continue to build easy access to web programming, consumers will eventually gravitate to these choices in greater volume.

So today, the numbers looks low. But like the boy that stuck his finger in the dam to stop the flow of water, other cracks soon develop and the hole gets bigger. The flow moves from trickle to small stream. Programmers will be hurt less than cable companies in the current cord cutting analysis. But it is a trend that will only keep flowing.