After years of hype, cord cutting is finally real. But is it a revolution?
Cord cutting is finally real. And with that comes an admission on just how wrong I was for the last few years.
I was a skeptic that this would happen in a meaningful way anytime soon. My view was always that people get older, have kids, want cable news, want to sit in their living rooms and watch things on a TV rather than a laptop, and with the resurgence in quality cable dramas, the trend towards younger folks' cord cutting was more a stage of life than a massive industry shift.
A new study by PriceWaterhouse Coopers released today backs that up, to some extent. I was right, until this year. Last year 91% of people saw themselves staying cable subscribers. This year that number has fallen to just 79%.
Further, 23% of existing US cable customers engaged in cord-trimming in the past year, or scaled back the size of their package. More than 16% said they had unsubscribed completely in the last year. And 5% had never subscribed at all – the bulk of them are millennials. Let’s see if a new VICE network can change that.
It’s more worrying for the younger 18 to 24 year old demographic. The study said they are 67% more likely to be cord-nevers than cord-cutters.
A few things changed all that. Almost all TV becoming almost universally available via streaming services, Netflix (and to a lesser degree Amazon) overtaking cable channels in creating must watch dramas and being the place that talent all wants to go, streaming running from the average TV in a more seamless way than ever before. Some 78% of those surveyed subscribed to at least one of these services, and there was no evidence they cannibalized one another.
I’ve long since stopped thinking I represent where the market is going, and assumed I’d always be on the other – the dino – side of any cord-cutting revolution. But as I was reading the report, I started to think about my own video consumption habits. I love TV, unapologetically. Yes California parents, I even let my kids watch it. Daily even, if they behave.
And yet, for the first time in my adult life, I could probably go without cable. My kids watch Amazon and Netflix, almost exclusively. Eli thinks all TV starts with a red screen (and takes too long to load, but that’s another story.) They watch some shows on Comcast OnDemand, but I could easily order them on iTunes or Amazon, and it’d be cheaper than keeping a cable subscription.
The only shows I watch on TV that aren’t available on streaming are sports, reality TV, and the occasional award show. But almost all of that is on broadcast TV. I still watch some of the AMC hits, Showtime hits, and John Oliver on HBO. But not so intensely that I can’t wait until it comes out on Netflix or grab it on iTunes. And the best John Oliver rants are always on YouTube.
Meantime most new shows I’m excited to watch are pretty much all on Netflix.
For the first time, even a dinosaur like me can only think of one reason not to get rid of cable: The hassle. And that’s why the figure of people who never had the cord to begin with is so key. They’re not being given a reason to hitch a ride on the inertia-wagon.
Henry Blodget had an amazing presentation at his Ignition conference yesterday that put a lot of this in Mary Meeker-like graph form.
But all this said, I think we overestimate how much of a “revolution” any of this is. The very reason that it would suddenly be so easy to cut the cord, for me and – judging by these numbers – lots of others, is that we aren’t really changing our behavior. We aren’t cord cutting as much as cord swapping.
I still sit down and turn on the TV. I push the same buttons on the remote. I still go to the same TiVo interface. I just ba-boop! down two spots on the menu from “My Shows” to “Find TV, Movies, & Videos” and click on Amazon Video or Netflix, instead of a saved show or the Live TV Guide.
I still pay a monthly fee for great entertainment, and still occasionally pay a one-time fee to watch a movie or a special. I’m just paying it to an “Internet” company rather than a “cable” company (who increasingly controls the Internet.) Both are paid automatically from my bank account. And if I get rid of cable, I’m paying way less.
This isn’t a grand change in behavior. It’s just paying a different party for the exact same service in the same way. Sure the business model is all kinds of crazy different on the back end, and as business reporters that’s what we fixate on. But not so much from the consumer point of view. It’s tantamount to the “revolution” of watching more new shows on AMC versus HBO. The difference – from the consumer’s point of view – is largely which button you push on your remote.
From the talent side, you don’t see the wailing and gnashing of teeth towards Netflix that you might see directed at companies like Spotify or Pandora. Many Netflix show runners feel it’s a dream job. They’re highly paid and typically given more creative freedom. Just watch “A Very Murray Christmas” and tell me that would ever be on Broadcast TV. Sadly it showed far more edge than NBC’s sanitized, school-play-like reboot of the Wiz.
Of course, it's potentially devastating for cable, which is why you see companies like Disney, A&E, Comcast and more going apeshit investing in younger, hotter digital brands. (Mostly I mean VICE. No one thinks Re/Code is young or hot.) And really, cable only has itself to blame: As long as I can remember, consumers have bitched about having to pay for more than one hundred channels when on average we watch about a dozen. The survey puts it at about half of those asked, and frankly I don’t know how it’s that low. Not too many industries that are supposed to be about joy and entertainment can ignore customers demands for decades and not eventually face the repercussions of that.
One behavioral change is clear: Increased multitasking during viewing. And that lead to one of the most surprising findings of PWC’s survey: People aren’t nearly as bothered by commercials as they used to be. When PWC asked cord-cutters what would get them to re-subscribe, only 14% said commercial-free entertainment. Only 3% said commercials were a reason they cut the cord.
Indeed, according to CBS research only 50% of DVR ads are actually fast-forwarded through. Said the survey:
If that number seems high in an era of impatience and remote-controlled devices, consider that most of these viewers are distracted by their phones and tablets. 53% of consumers in our survey say they use their TV, laptop and mobile phone at the same time.
I do this the bulk of the time real TV is on in my house.
This isn’t necessarily great for traditional TV: People aren’t fast-forwarding because they are tuning it out, not because of that old lie that ads would just get better and we wouldn’t want to fast-forward them. In other words: Cable’s got a problem sorting through what a view really means even for those who stay.
We talk about Silicon Valley arrogance all the time, but the sudden spike in cord cutting actually happening boils down to Hollywood arrogance. When YouTube was the “new TV,” networks, directors, writers, and the like rightfully scoffed that “Game of Thrones” would never be threatened by kitten videos. But no one expected Netflix or House of Cards to come out of the 1s and 0s, data-obsessed, dweeby Silicon Valley.
Directors, writers, actors and the like have now rightfully swapped sides, viewing Netflix as a dream gig. And cable has to deal with the fact that there’s finally an alternative in programming – and it requires nothing more than toggling down the TiVo menu.