According to a recent SNL Kagan press release 251,000 households became cord cutters between Q4 2012 and Q4 2013. This is the most relevant statistic, as it includes all three type of providers: Cable, Satellite and Telco.
Traditional Cable/MSO operators (Comcast, TWC etc) are the biggest losers and Telco type providers (AT&T U-Verse, Verizon FIOS) show the biggest gains. The total share of the market breaks down as follows:
- Cable 54.4 M
- Satellite 34.3 M
- Telco 10.7 M
Much of the debate on whether cord cutting is “real” or not comes from how these kind of statistics are interpreted. The churn factor – e.g. people jumping from TWC to U-Verse – is irrelevant to that debate. AT&T has been aggressively taking customers from Cable for years now. In my area AT&T offers a $49 package of TV and internet for 12 months, PLUS a $100 gift card. If you are paying over $100 per month for Cable why not switch to save money? (I can think of one reason: AT&T customer service is the worst).
Taken as an aggregate, 250 thousand cord cutters represent only about 0.25 % of the total 100 million active Pay TV subscribers. An investor would probably call that performance “flat” , not a major loss. Or in other words, cord cutting is real, but still just an early adopter phenomenon.
OK so cord cutting is real, but will the trend continue? That depends….
The churn numbers (people switching to cheaper introductory deals) are actually much larger than the cord cutting numbers. If Pay TV providers would offer a la carte plus internet at a fixed monthly price of under $50 per month I think the trend would reverse. Of course Cable has been fighting the demand for a la carte forever so don’t hold your breath.
In the end today’s Cable prices are just too high relative to the value. Something will change. Stay tuned.