Thursday, June 30, 2011

Young People More Likely To Cut The Cable Cord

According to the latest J.D. Power and Associates survey, the younger you are, the more likely you are to either cut out cable service completely or to drop your pay subscription services. The older generation less likely to change their habits for new technology. In addition the survey found more satisfaction with over the top video services like Netflix and Redbox, then with pay subscription services like HBO or Showtime. "The survey found that Netflix and Redbox has above-average customer satisfaction scores, which were based on six factors: variety of videos provided; ease of use; cost of service; customer service experience; billing; and offerings and promotions."

While the 3% drop of cable services and 6% downgrade of pay services may appear small, the challenge is that it may indicate a trend that will only grow as more of the younger audience begin to change their viewing habits, from linear to on demand. Movies are the biggest threat to the pay services as consumers can access these titles through multiple resources. Where the pay networks can excel is with original content that they own and can limit their distribution paths. Customers that want to watch "Game of Thrones" on HBO must be an HBO subscriber. The longer HBO can withhold the series from DVD and non cable distribution platforms, the better it is to their subscription business.

While cord shaving today is the more serious threat, future cord cutting should not be so easily dismissed. Cable operators need to cut mobile distribution deals so that their linear and on demand lineups remain accessible both inside the home and out. And operators are facing struggles trying to negotiate deals with programmers for access of their networks on mobile devices authenticated with a cable subscription. But that always available coverage by the cable company will be a real game changer against these alternative distribution platforms.