Tuesday, April 5, 2011

Consumer Reports Supports Cord Shaving

In this May's issue of Consumer Reports, the cable operators are ranked for service with FIOS and AT&T U-Verse coming out on top. In addition, the magazine reports a growing trend toward cord cutting and cord shaving. "While only 1.4% of consumers have cut the cord in the last two years, 7% of current pay-television subscribers are considering canceling their service, according to a Consumer Reports survey."

In fact, Consumer Reports provides suggestions to help consumers lower their monthly cable bills, "including dropping premium channels such as HBO and Showtime; canceling TV service in favor of free, over-to-air broadcast supplemented by a service such as Netflix; and downgrading to a lower-speed broadband tier."

It is precisely this trend that is pushing the cable operators to build mobile apps to augment their delivery of programming and extend the reach of their platform. It is why programmers who fight these mobile apps may find their revenues from license fees begin to drop as consumers shave services to lower their bills. Unless programmers are getting the same license fee from these alternate distribution platforms, they may be in fact getting Netflix pennies for cable dollars.

For now, the premium networks have a far greater chance to be hurt by Netflix and Amazon then the basic networks. For cable subscriptions, consumers are switching providers in their neighborhoods to the lower cost service. So while cable basic subscription drops, telco and satellite subscription is still rising. But as the trend to downgrade accelerates, even those providers will eventually see drops in their base. Adding value to the cable subscription with access to the linear line-up, DVR, and on demand channels remotely can help slow down or perhaps even reverse cord cutting and cord shaving.


  1. Wow! I never thought about the impact of Netflix on cable and satellite companies! Good blog! Thanks!

  2. One of the reasons I cut the cord...

    By subscribing to basic cable, even if you never watch Fox News, you're helping it stay on the air and be profitable, because your cable/satellite/telco operator still pays them a subscription fee to be part of your basic cable bundle... whether you want them or not.

    The fact that I only watched about 10 out of my 200 channels regularly made me wonder why I was paying hundreds a year for the 190 channels I never watched.

    Turns out there will be only two shows this year that I REALLY want to watch, but won't be able to get via iTunes, Amazon, Hulu, Netflix, or watching on the network's web site... "True Blood" and "Entourage". Only HBO is completely blocked.

    Not all of them can be streamed to my TV, but I can live with that to save over $400 a year and not have part of my cable fees go to support Fox News against my will.