Sign in with
Sign up | Sign in

Few Americans Cancel Cable in Favor of Online Video

By - Source: Tom's Guide US | B 28 comments

Getting premium cable and Internet, as in this Comcast package, is still pretty appealing.Getting premium cable and Internet, as in this Comcast package, is still pretty appealing.Despite declarations from some purported experts and the media, rumors of subscription TV's demise are greatly exaggerated. If you've decided to stick with cable or satellite TV, you are far from alone.

While cord cutters — those who cancel cable or satellite TV in favor of antenna and/or Internet options — get a lot of attention, they actually make up a very small percentage of people who watch video entertainment: currently about 1 percent, and not expected to be more than 10 percent for the foreseeable future.

How many cancel cable and satellite?

Combining cable and satellite company data with his own estimates, industry analyst Craig Moffett of Moffett Research recently reported that 316,000 U.S. households cut the cord in the past 12 months. In a paper on the topic, he called that a small but significant number.

But other experts disagree about how important that loss is. An April 2013 report by consulting firm Deloitte stated that they expect about 1 percent of current subscribers to cut the cord in 2013. In a video interview, Duncan Stewart, Deloitte's director of research, technology, media and telecommunications, said that all the attention on cord cutters may be due to people saying they want to leave cable but not actually doing so. (Deloitte representatives declined to comment for this article.)

MORE: Cord Cutting Dilemma: Should You Keep Cable TV?

In a 2012 survey by online video technology company Tremor Video, 31 percent of respondents said they were considering canceling their pay TV subscriptions. And in a 2012 Deloitte survey, 9 percent said they had cut the cord, which would equate to 10 million people.

But the reality was much different. While cable providers are losing customers, the pace may be slowing, and customers who leave may in some cases simply by switching to other providers.

For example, in 2012 Comcast, the largest cable TV provider, lost 336,000 video subscribers, or about 1.5 percent of its customers. This is fewer than in 2011 when it lost 460,000, which is fewer than the 757,000 who canceled Comcast video services in 2010.

Dan Rayburn, an online media expert from StreamingMedia.com, says asking people if they want to cancel cable is like asking if they don't want to pay taxes. Nobody likes paying for TV, but most of us continue to dish out every month to keep the shows coming.

Satellite provider DirecTV has lost 63,000 subscribers so far in 2013, which gives them an estimated 20 million current subscribers. Projected out, that would mean losing 0.6 percent of its audience this year. Dish Network has lost 42,000 subscribers this year, which for a full year, would also be about 0.6 percent of its total subscriber base lost in 2013. Dish has an estimated 14 million subscribers remaining. 

In its second quarter report for this year, Time Warner Cable stated that it had lost 191,000 video customers. (In the first quarter, it lost 119,000.) That leaves the company with 11.9 million video subscribers.

However, just because people cancel their accounts with one TV provider, that doesn't mean they've cut the cord. Many people just switch companies. During the same period that Time Warner Cable, DirecTV and DISH lost customers, AT&T's U-verse TV service gained 233,000 customers, while Verizon's FiOS added 140,000. SNL Kagan, a media analysis firm, estimates that from 2008 to 2012, U-verse subscribers jumped 44 percent and FiOS added 26 percent in the United States. Comparatively, Comcast lost 2.3 percent and Time Warner Cable dropped 1.7 percent in the same four-year time period.

'Cord shavers' versus 'cord cutters'

As TV costs continue to grow every year, we're much more likely to see "cord shavers" than cord cutters, Rayburn said. Cord shavers trim the fat from their subscriptions to save money, getting rid of premium channels, DVRs and other extras instead of canceling their subscription altogether.

Bundled services also dissuade cord-cutting. In many places, you can get Internet, TV and phone service together for about $90 per month, but if you go with only Internet, you end up paying around $50 a month. The savings don't measure up to the inconvenience of having to work with a separate set-top box like a Roku or give up live TV, not to mention potential extra costs that come from upgrading to a higher Internet service tier that is often required when you stream a lot more content.

MORE: Beyond Netflix: Where Your Shows Are Hiding

Rayburn and Stewart both say that those customers who will most likely cut the cord are people who don't watch much TV in the first place. Cutting the cord becomes much more difficult if you like watching sports or other live TV shows, such as NFL games and "American Idol." Also, the growth of streaming video isn't necessarily a sign of cord-cutting.

This week, research firm NPD released results from a survey of more than 5,000 Americans over age 18 about their online video watching. It showed that households subscribing to premium channels such as HBO are 19 percent more likely to have their TV connected to the Internet — mainly through a gaming console such as the Xbox 360 or PlayStation 3. "Yes, online TV isn't just for people who want to get rid of cable," John Buffone, director of devices for NPD Connected Intelligence, told Tom's Guide.

Deloitte says that it sees a maximum of 10 percent of subscribers cutting the cord within what it calls the "foreseeable future" — which would leave 81 million or so of today's 90 million people who still subscribe to pay TV.

Follow Michael Gowan @zebgowan. Follow us @tomsguide, on Facebook and on Google+.


Discuss
Ask a Category Expert

Create a new thread in the Streaming Video & TVs forum about this subject

Example: Notebook, Android, SSD hard drive

This thread is closed for comments
  • 2 Hide
    stingray71 , August 15, 2013 6:52 AM
    I cancelled my Dish subscription this spring and went with antenna and stream the rest of my content. Having no issue finding all of my content I was watching before. Even with buying my favorite shows on Amazon, I'm still way ahead of where I was before paying for Dish.

    In fact I'm watching two shows I wasn't watching before because I found them on Amazon Prime (Gimm and Falling Skies).

    My only concern is staying under my 250Gb cap with my ISP, so far I seem to be in the upper 180Gb range per month.
  • 0 Hide
    iknowhowtofixit , August 15, 2013 6:56 AM
    I get why people are ditching their TV service. I'll probably consider it when I can steam NFL football without a DirecTV subscription.
  • 2 Hide
    g00fysmiley , August 15, 2013 6:59 AM
    dropped cable over a year ago, but i probably am in the minority in that i was rarely watching tv to begin with, i have netflix and have for a while, i was watching it more often than cable and even then maybe on the high end i watch 5 hours a week. but i do knwo pther people who watch mroe tv who have switched to hulu plus and a antenna
  • Display all 28 comments.
  • 0 Hide
    RooD , August 15, 2013 7:08 AM
    It is cheaper for me to bundle basic cable with my internet, the only reason I still have it... Saves me 5$ a month
  • -1 Hide
    lamorpa , August 15, 2013 7:15 AM
    Suckaaaaaaaaaaaaaaaaaaaaaaaaas!!!!!!!!!!!!!!
  • 1 Hide
    cewhidx , August 15, 2013 7:19 AM
    I dropped Dish Nertwork last spring when I built a HTPC. Now between Netflix, Amazon, and Hulu, I am saving a small fortune on tv. I think that this is going to end up happening more & more, hopefully to the point that cable & satellite tv companies are forced to make their prices somewhere in the vicinity of reasonable.
  • 1 Hide
    chomlee , August 15, 2013 7:40 AM
    The main reason why people havent cut the cord is the whole buisiness model that is between the networks and the providers. In a forward moving society, the networks would put up all of their stations available on the web (with comercials or subscriptions) and have apps that people could use to access those stations on boxes like roku, apple, googletv etc. They dont do that because the networks are getting greedy and holding the providers hostage with the threat to make their services availble online then in order to get more money from the cable companies, the networks agree to not provide the services and it becomes one big circle jerk. Then because the networks raise their rates, the cable companies charge us more and because they are allowed to have monopolies in the US, most people dont have a choice (except satelite TV).

    Our system is outdated and will continue to be with all the politics and money pushing that is going on.
  • 0 Hide
    elbert , August 15, 2013 7:42 AM
    So not only is online streaming getting ever new potential customer its also going to take 10 percentage off every cable and dish company in the foreseeable future. Ouch!!! I see why they are have such trouble with tv providers wanting more money. If the cable and dish company's don't switch to a la carte they have no way off their sinking ships.
  • 2 Hide
    gmarsack , August 15, 2013 7:45 AM
    When I first got married, we went 7 years without TV. Once my son arrived on the scene, "Hello kids programming!" :( 
  • 1 Hide
    CaedenV , August 15, 2013 7:52 AM
    Interesting article. Personally I have never had cable. The cable company was too stupid to realize that we had a cable line on our street growing up and refused to give us cable, and as we lived in a bit of a ravine satellite was not an option either. But because I grew up on videos instead of TV I now have an accute distain for advertisements in the middle of shows. If I have to watch more than 1-2 comercials, then it is simply not worth watching. I would much rather spend that $50-100/mo buying shows on a DVD or BluRay release after the end of a season.
    Sure, I am always behind, and if I was into sports then it would not be an option, but I get uninterrupted TV goodness with as many episodes in a row as I can stand to watch, and typically in much better quality than people get with cable. Plus I can watch a show I like over and over again to my heart's content, and if I don't like a show, or don't plan on watching it again, then I can sell it to someone else for a little less than what I bought it for.

    I think that cable is not going to go away quickly. It is part of the cultural fabric of my and my parent's generations. Not having some form of cable or TV has such an odd stigma to it because it was the first 'luxury' item that people could afford back in the '70s and '80s, so to not have it makes them feel poor.

    But cable is not doomed. I mean, I am more than willing to blow $20-50 on a single season of a show that I like. That is a single 45 minute show, not even a whole channel. If someone were to give me a subscription option of $20-50/year for each show that I want, but with limited commercials (2-4), and on-demand capability for previous episodes in the season, then I would go for that. In a given year there are typically only 3-4 shows that I would be remotely interested in watching, so at $50 a pop then it would be a monthly bill of $4.16 per show. It would keep my bill down, avoid the crap that I don't want to deal with, and put a lot less strain on the network.

    But who knows. I am not exactly a 'normal viewer' so maybe this would not fly with the masses. But with streaming services getting a bit better every year I would think that TWC would much rather have me pay some $20/mo for the few shows that I want to watch 'live' than $45/mo for all of the bandwidth that I choke down every day streaming a-la-carte services like Netflix, YouTube, and CrunchyRoll. And while they don't have to think that way yet, they will have to start thinking that way in the future.
  • 0 Hide
    RickTacular , August 15, 2013 8:30 AM
    I am moving into a new apartment next month and did the math. First, I'm stuck with ATT so that's already a problem. Second, I'm getting free installation and hardware for TV & Internet, but would have to pay (get this) $200 for the installation (bastards) & hardware for just the Internet. Next is the need for two Roku, that's $300. With the subs to Hulu and Netflix. When tallied up for the year, the cost is just about the same, given monthly subscriptions and so on.

    The silver lining about this is that after the first year, Uverse will totally ratchet up the price of their service, and then it will totally be more cost effective to tell them to go screw their TV service - unfortunately I still need their Internet service to watch the TV, but still.
  • 0 Hide
    yiplong , August 15, 2013 8:53 AM
    I rarely watch TV but still have cable. It's cheaper to have the bundle rather than paying for internet alone. I also need landline phone due to poor cell phone reception at home.
  • 0 Hide
    yiplong , August 15, 2013 8:54 AM
    I rarely watch TV but still have cable. It's cheaper to have the bundle rather than paying for internet alone. I also need landline phone due to poor cell phone reception at home.
  • 0 Hide
    yiplong , August 15, 2013 9:00 AM
    I rarely watch TV but still have cable. It's cheaper to have the bundle rather than paying for internet alone. I also need landline phone due to poor cell phone reception at home.
  • 0 Hide
    mcd023 , August 15, 2013 9:13 AM
    believe me, all I need is to be able to stream football and the walking dead, if it ever comes back :_( , and I'm set
  • 1 Hide
    dark_lord69 , August 15, 2013 11:14 AM
    My wife and I cancelled cable and haven't looked back. She has a friend that just cancelled her cable too and she bought a Roku.

    My wife and I have Netflix, Hulu and use Vudu or the Playstation network to rent. All local stations tune in HD by connecting the cable line directly to my TV's.
  • 1 Hide
    kinggraves , August 15, 2013 11:54 AM
    I think the issue is based on the cablecos manipulating the situation so that cord cutting isn't realistic. The same company that owns the internet owns the cable, and they prefer the cable model which has always been overpriced. Bandwidth caps prevent those who watch a lot of TV shows from doing so online. Bundle deals are not just "better deals" either, they are the CHEAPER deals. Comcast charges $50 dollars for internet + TV and $75 for internet alone. This is pretty blatant price manipulation to force customers into keeping the basic cable service at least. They can then try to stick you with install, box fees, PPV services, and extra channels by teasing what you "could have" for a few dollars more.
  • 0 Hide
    Thorfkin , August 15, 2013 12:53 PM
    Cable / Satellite television just doesn't make financial sense anymore. The lowest tier packages will usually run you at least $50 a month. That's $600 per year. A season box-set of any particularly TV show on blu-ray will run from $35 to $70 depending on the show. I could easily buy a season of 10 different shows per year and still pay less yearly than I would pay for a basic cable subscription. The quality of the content on Blu-ray is significantly higher than anything the cable company will transmit, even when you're paying extra for the HD channel packs and a high definition capable DVR / Cable Box. Also the Blu-ray sets are commercial free which saves me time and a whole lot of personal frustration. The only thing anyone might need cable / satellite subscription for is the stuff you generally can't get on blu-ray like sports and live programming. I'm not into either of those so for me the price for cable / satellite is simply too high. Way too high.

    Given these things, I just don't understand why so many people still choose to pay for cable / satellite television. I'm proud to say I vote with my wallet.
  • 0 Hide
    XZaapryca , August 15, 2013 1:51 PM
    I wonder if those numbers take into account people who still pay for cable TV, but never watch it. Comcast's splitter started causing internet issues so the TV hasn't been hooked up to cable in over six months now. Since it's only a $3 difference whether we get basic channels or not, the trouble to call them hasn't been worth it. Figure it out when NFL starts back up...
  • 0 Hide
    onichikun , August 15, 2013 2:36 PM
    Honestly since TV has become inundated with reality TV shows, I have no reason to watch. I used to enjoy the history channel, Sci-Fi, TLC etc. but have hard time finding enough content to make a 50$+/mo subscription worth it. I remember when the history channel was about history, and the music channel was about music.. how times have changed. Now when IO turn on my previously favorite channel I am either watching a show about a pawn shop, or people fight over abandoned storage containers... But yeah, services that allow me to avoid crap TV and watch shows I want for less/mo (e.g., Netflix) make cable subscriptions pointless.
Display more comments
Tom’s guide in the world
  • Germany
  • France
  • Italy
  • Ireland
  • UK
Follow Tom’s guide
Subscribe to our newsletter
  • add to twitter
  • add to facebook
  • ajouter un flux RSS