Cord Cutting No Myth

Second quarter cable subscription numbers dropped for both cable operators and satellite operators.  And while Verizon FIOS and AT&T U-Verse did add cable customers in the second quarter, more consumers left cable then switched providers.  "Over the past year, multi-channel video providers lost about 100,000 subscribers, versus a gain of about 380,000 over the prior year, according to LRG."  While the number that cut the cord completely is miniscule, a tenth of one percent, it seems indicative of bigger problems.  It seems that no one will be surprised if third quarter shows a growing trend of customers completely cutting the cable cord. 

Streaming TV Competing with Cable Networks

While video certainly didn't kill the radio star, the growth of new technologies definitely disrupt old technologies.  Broadcast television changed consumers use of radio in the home and cable changed how people watched TV.  This disruption doesn't always kill the old method, but it certainly changes  consumers' behavior.  Today in the the world of cable TV, it is the growth of broadband that has disrupted viewing patterns and usage.  Now we find that consumers can watch shows on other devices and on demand.  But what still has been missing has been an online video channel that mimics cable and broadcast with a linear schedule of programming.  And now, one is breaking through.

"As HuffPost Live enters its second year—its first birthday was earlier this week—the fledgling video news network may look to establish a Web version of appointment TV with more regularly scheduled programming, said Roy Sekoff, president of HuffPost Live and The Huffington Post's founding editor."  For viewers that don't want to pick a show to watch but simply turn on their device to watch regularly scheduled programming, HuffPost may be that go to online video network.  And for consumers that have officially cut the cord on paying cable subscription fees, this channel is free without additional subscription charges. 

It is a model that cable networks don't want to offer because it would cost them important license fees from cable operators.  That cable operators want networks to give them the digital rights to their networks to stream to "authenticated" customers is a retention tactic to provide additional value to the current customer base.  HBO GO and other channels have had positive results in keeping and growing their cable subscription base with this online feature.  Some may wonder that customers user names and passwords are shared with non customers but it is not deemed problematic at the moment to HBO. 

Still as costs for cable rise and viewers increasingly drop their cable service, more companies will start experimenting with streaming linear schedules of programming, most likely augmenting the on demand nature of services like Hulu and Netflix.  Consumers still like scheduled programming and HuffPost Live may be on to a winning opportunity with its linear programming line-up.