Friday, March 21, 2014

Cord Cutters Take A Small Bite

The headline reads that TV subscriptions fall but when you look at the number of cable cord cutters in 2013, about a quarter of a million homes, total cable subscription remains north of 100 million subscribers.  In total drop, that equates to a quarter of 1 percent.  So, will the number of cord cutters continue to increase, the answer is yes, but given consolidation of cable operators, the rise of broadband subscription, and the close ties of cable operators and programmers to authenticate the TV Everywhere experience, it seems unlikely that cord cutting will impact the economic model for quite some time.

Certainly there will be a transition to a more IP world through the cable box, but the box to the home will still be controlled by the cable operator, offering important revenue opportunities and big data for research and better advertising.  Most likely, OTT content like Netflix will end up working along side the cable universe and no longer seen as a competitor to cable; rather, as another option for the cable customer. 

Unfortunately the costs for cable will continue to rise, causing more households to cut the cord.  But I expect that cable operators will smarten up and figure out new revenue models to win back those cord cutters and creating a better cable/broadband experience for a reasonable monthly fee.  Because as a connected customer, the cable operator has more opportunity to sell in more services too, like security and e-commerce.  As for the cord cutter news, a .25% drop may be a tickle on the back of the throat, but how big it gets remains to be seen. 

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