Cord Cutting Getting Real – But What’s Next?

Wow!  I’ve been doing this blog since 2011 when “cord cutter” was pretty much an industry insider term. When only nerds talked about using strange set tops to get streaming content.

But when I read that Pay TV lost 566K Subs in Q2 it would seem that cord cutting is now having major impact. So significant that the Wall Street Journal is using terms like “Media Meltdown” and blaming cord cutters for the the recent decline in both the Nasdaq and the Dow Jones Industrial Average.

Meanwhile, check out what’s happening over at Netflix were stock gains seem to be the reverse of the trend in Cable.

But the future is still hazy. We seem to be in a time of experimentation by the content providers.  Are we really going to have dozens of “mini-bundles” or “skinny-bundles” as the new Pay TV model?  I agree with the article – no single mini bundle makes sense for everyone.

The ideal of course, from the consumer point of view, would be “create your own bundle, i.e. a la carte. And not only a la carte but CHEAP a la carte. If my 10  or 20 channels add up to the cost of the traditional Cable bundle then what’s the point? By the way Sony’s VUE is said to be the first offering a la carte but details are sketchy.

a la carte? courtesy jeffreyw on flickr

a la carte?
courtesy jeffreyw on flickr

Maybe a la carte won’t happen. It doesn’t work for restaurants so why should it work for Pay TV.

So what’s next? If I had to bet, I’d put my money on Netflix. They already have the  infrastructure and a huge growing subscriber base. I see a partnership or two on the horizon….

 


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3 Responses to Cord Cutting Getting Real – But What’s Next?

  1. Len Mullen says:

    This is all WILD speculation by people who may understand the industry but probably do not understand cord cutters. Who does?

    Everyone enjoys beating up on the Cable Industry. They have made a lot of money — some people say too much. The fact is that cable is still a bargain. I remember paying for local phone service, local long distance, and long distance — now it is a feature of cable. In 1996, AOL charged $20/month for dialup. Before that, they charged by the hour! Now we get high speed internet as part of a cable bundle.

    When cable first became available, it was amazing. We had always used an antenna and were accustomed to inconsistent picture quality, so the beautiful (SD) presentation was immersive. The movies on Home Box Office (that’s what HBO stands for) were very good. They were unedited movies that had recently been in theaters — so there was nudity and bad language. I remember visiting my sister on weekends just to sit around, eat pizza, and watch HBO.

    Some people chose to spend extra money for high quality, ad free movies, news, and, eventually, sports. To get more people to choose to spend extra money, the premium providers entered into ‘exclusive’ agreements for access to sports content. Exclusivity is expensive, but it brought eyes and wallets to cable. It also fragmented the audience. Some people watched less baseball and hockey. I think we are seeing the consequences of that today. I think the combination of fragmented and declining audience plus steadily increasing prices at the gate, at the concession stands, and at Comcast have diminished demand. The bundling tactic hid this for a long time, but the resurrection of broadcast television and the arrival of streaming have given people options. Many are exercising these options. The industry is a bit panicked and content providers are abandoning exclusivity to some extent. The stock market is reacting to this uncertainty. That is what we are seeing right now.

    Same thing with movies. Do I want to go to a theater and spend $25 (for a couple) for tickets, them about the same for popcorn and a soda when I can wait a couple months and but the BD? BDs are pretty awesome on my 60″ plasma and refreshments are better! That was Comcast’s proposition ten years ago. Now Netflix and Prime are undercutting Comcast.

    Comcast could solve the problem by reducing their prices. It wouldn’t take much. People talk about Sling TV at $20 with ESPN and add HBO for $15, but that does not include the cost of unthrottled and uncapped high speed internet. I pay $45 a month for that, so $65/$80. And that is for one stream plus you have to buy a device to get that stream to the television.

    The real problem is on the content end of the business. Ad supported broadcast television — which includes the NFL — is free. So there is an inexpensive alternative. For the most part, broadcast content is very inexpensive and cable subsidizes it via carry fees. Maybe the era of $200,000,000 contracts will end? Certainly the networks have decided they are overpaying for talking heads. I do not believe ESPN is sustainable at $30/month, but I suspect they will figure out how to stay on the air.

    • Greg says:

      I agree with a lot of this Len. Another point is that Cable is completely voluntary. No need to beat up on the industry in that sense. Just don’t subscribe.

  2. Amber says:

    I wanted to cut the cord this month.

    I had it cut for over five years but by last year I was the manager/member of 3 Fantasy Football League teams and reluctantly signed up for cable for the season. I needed to stay on top of the leagues and the go-to-the-bar option wasn’t cutting it.

    In that span of less than a year my price has never stayed the same and I have had to call them over 30 times for one reason or another. One of those calls was because I had a late fee due to the modem rental being suspiciously removed and then re-added after I auto-paid my bill. Extremely shady doesn’t even begin to cover it. Price hikes, inconsistent internet speeds/availability, and billing issues …once they ‘forgot’ to withdrawal my payment.

    Its. Been. Hell.

    So now I am hunting for alternatives and it doesn’t look good if you are a football fan. I *DREAM* of the ability to stack and add only the channels I want to watch – because seriously there are like seven total that we watch. Seven out of four hundred hardly makes my two-hundred dollar bill worth it. And, no, I’m not going to call in every three months and renegotiate my rate with “Kevin” because “Kevin” sucks.

    You *can* mirror off of a peer-to-peer or try to tap an illegal stream but you have to follow the bounce if it gets detected – and that’s just too much work when I just want to relax and watch a game. Streaming options aren’t pretty in most cases and I was hoping to not have to design and build a ‘rig’ to just watch a game.

    While NFL Sunday ticket *is* available for streaming to things like Roku and Chromecast – it isn’t available to anyone within an area that can get Direct TV. (Guess where I live?) This is because its ‘owned’ by Direct TV. What’s even better about this ‘deal’ is that AT&T now owns Direct TV. The exact monster I was seeking to run from.

    One of my friends commented on how she had the MLB version of Ticket and it was relatively easy, “It feels like NFL is in in bed with Cable.” Which to me is becoming increasingly obvious.

    So, after a rather fantastic and entertaining display I put on for the AT&T retention team I will probably end up back in bed with them too (albeit through a third party) – unless I can find another option.

    Back to the hunt.

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