Cord cutting is no longer a risky adventure undertaken only by a small group of early adopters or a few tech savvy individuals. It now has the backing of a huge chunk of television viewers in the US. It is soon expected to become the predominant choice of a majority of the American viewers, if things continue as they are now. So, why is it such a craze these days? What does it mean for consumers? How are the various players responding to this? Let’s find answers to them.
What Is Cord Cutting?
At its core, cord cutting is a nightmare for cable companies. Television consumers are disconnecting their pay TV subscriptions (both cable and satellite TV) in favor of alternate TV entertainment options. Such consumers are called cord-cutters and they usually have two options before them. One is that they get an antennae, and enjoy over-the-air (OTA) or broadcast channels, which are free. The second is that they can go with the on-demand streaming services, which deliver content over the internet.
Why Are TV Viewers Cutting The Cord?
The TV viewers are not disconnecting their pay TV subscriptions, because they have stopped watching television altogether, or are watching less of it. Indeed, they are doing so for very different reasons. For starters, they are getting much better value somewhere else. The internet offers them a much wider variety of content, more flexibility in how they access their content, and at a much better prices. For instance, services like Netflix, which cost less than $10 per month per subscription, allows the user multiple advantages. A Netflix user can enjoy their content when they want, where they want, and on whichever device they want. They can enjoy their TV shows and movies as many times as they want. Similarly, other streaming services offer different features and conveniences that have made the pay TV subscriptions obsolete to their target audience.
Who Are These People Cutting The Cord?
Well, the first of the cord-cutters were the early adopters, who were good with technology and were heavy internet users, such as millennials. As soon as the first streaming services hit the market, they were the first to sign up for them. With time, as they realized that they are spending more time on streaming services than pay TV anyway, they simply disconnected their pay TV subscriptions. Now, the streaming services have grown so popular and offer so much content that even the older generation TV viewers are quitting pay TV in favor of them. Today, everyone who has access to a good speed internet connection is cutting the cord. Another factor that is known to affect the connecting or disconnecting behavior of cable subscription is the household income. Households with lower income, looking for cheaper entertainment options, can easily get a wealth of such entertainment options with streaming services.
How Are Cable Companies Responding To It?
It has been clear for some time that cord-cutting is the death knell for cable companies. Industry observers have been predicting a demise of pay TV as we know it. Despite all the overwhelming evidence, the cable industry has been remarkably stubborn in accepting this threat. Many of them have simply decided to turn a blind eye to cord-cutting and bury their collective heads in the sand, hoping for the new threat to ‘just go away’.
However, not all cable companies are so shortsighted. Some of the pay TV companies like DIRECTV and DISH have read the writing on the wall, and are reinventing themselves to leverage this new change, rather than fight it. Both of them have already launched their own streaming services, which offer live TV to their viewers. Unlike the on-demand streaming services, the live TV streaming services offer live TV just like cable TV, with the added benefit of delivery over the internet.
DIRECTV and DISH are not alone in this. A number of premium TV networks like HBO, Showtime, Cinemax, Starz, and many others are offering their own standalone streaming services too. For fans of these networks, a pay TV subscription is no more a prerequisite to enjoy their favorite content on these networks. Whatever content is broadcasted by these networks on TV is also available on their streaming services. It is clear that content is drifting away from cable. For cable companies, this means either they innovate to rise up to the challenge or not react to it at all, at their own cost. For now, it appears that most of them are pursuing the latter strategy, if we can even call it that.