Facial hair was hot this fall season, with bigger and zanier beards appearing on TV. But despite watching Duck Dynasty or the World Series victory of the hirsute Boston Red Sox, more consumers are taking out their razors to “shave” the cable-TV cord.
“Cord-shaving” has doubled since 2010, with 26% of pay TV subscribers now reporting they have trimmed cable spending in favor of Internet video, according to a new survey from Altman Vilandrie & Co.
Netflix, Hulu and other online video alternatives are the biggest benefi ciaries of cord-shaving. The cost of two video-on-demand movies would cover a Netflix monthly fee. That’s certainly incentive for consumers to use Netflix and shave the amount they would otherwise have spent with their cable provider.
While its great value and user experience are a major cause of cord-shaving, Netflix alone isn’t enough to cause people to cut the cord completely: the Altman Vilandrie research showed that few consumers feel that Internet video alone is sufficient. In fact, the survey shows that the numerous predictions of a cord-cutting apocalypse, at least for now, are overblown: Only 5% of households use Internet video as a substitute for cable. Younger viewers — who need to stay current with their friends on social media — are especially interested in live TV, with 76% of subscribers under 35 saying they subscribe to cable because they “want to watch TV shows as soon as they are available.”
Still, cord-shaving is a real issue, but the industry already has the structure in place to address it. Every major cable and satellite provider offers a form of TV Everywhere, which allows subscribers to access content on tablets, smartphones or Web-enabled TVs. But providers need to do a better job of promotion: Only 32% of subscribers knew their cable TV subscription includes access to this service. That number fell to 24% for viewers over 55. If more consumers realized they could access, for example, HBO programming through the HBO Go app, they might sign up for HBO rather than use Netflix for on-demand viewing.
As video viewing options proliferate, cable TV is in danger of becoming just one more menu option on a smart-TV remote control (or mobile device). Viewers can select from apps like Netflix, Amazon and Hulu Plus and cobble together a personalized TV regimen independent of cable. Cable still has the advantage today because of live programming and the volume of quality television content, but that could change as Netflix and other Internet providers create more original programming.
So while the sky isn’t falling for cable providers, the fur is flying as more consumers shave the cord. Whether that trend continues depends in large part how cable embraces new technology, promotes awareness of TV Everywhere, and catches up to Netflix on creating a customized viewer experience.
Jonathan Hurd is a Boston-based director of Altman Vilandrie & Co., a strategy consulting firm focused on telecom, media and technology.
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