Few Americans Cancel Cable in Favor of Online Video
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.)
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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.
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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.
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