Wednesday, January 22, 2014

Why The Myth of Cable Cord-Cutting Continues to Persist

The easiest story to write is the trend story.

I know from experience. Though it happened more while at a weekly business journal than my daily reporter days, it took place at both. It’s one of the easiest, go-to, paint-by-numbers stories of the newspaper media – find a trend, find a couple of quotes to back it up and, voila, trend story!

cable cord cutting
The easiest threat to make is the idle one.

“If things don’t change, I’m going to quit!”

“If you don’t empty the dishwasher, I’m leaving you!”

We’ve all been there. We may have even done it during serious negotiations – like when NBA players threatened to play en masse overseas during the last lockout. Some low-level players did but the overwhelming majority did not. Why would they?

That is how we have ended up at the mythical cable cord-cutting trend. It has been percolating and bubbling for the past few years, eventually ransacking my blog after I posted about why the streaming WWE Network will be a failure.

This is the definition of a trend story that has gone mainstream. Here’s an excellent example of how the story usually goes – the author puts out some facts from a consulting group no one has ever heard of and concludes it with, “I cut the cord in 2008” as if his personal experience is validation.

Here’s another example of “validation” that furthers both the trend story and the idle threat theory – 2.7 percent of cable subscribers are “thinking” about cutting the cord.

2.7 percent of American males also dream of being Johnny Football. That doesn’t mean it will happen.

There is no doubt a growing resentment toward big cable companies and that makes sense. Times are tough. The middle class is getting squeezed out of every last penny and cable seems like a gigantic waste of money.

I know that before I moved to DC in 2011, I whittled my cable bill down. I stopped getting HBO. I cancelled my extensive sports package. I focused only on “basic” cable. I wasn’t cutting the cord, but I was at least reducing the strain of that cord around my neck.

But for me, I can’t cut the cord. I love sports too much, as anyone who has read anything I’ve written about college football is likely aware of.

If I was writing this 10 years ago, or even five, then maybe cord-cutting would be an option for a sports-lover. But that ship has long since sailed. Think of the major events that have migrated (or will migrate) to cable – the Rose Bowl, the future college football playoff, the British Open, the US Open tennis tournament, the NBA Conference Finals, MLB postseason games, NASCAR’s Chase for the Cup and potentially NFL playoff games.

So for the majority of cable households – i.e., those with sports fans – cord-cutting is simply a non-starter. I won’t argue that cable is appropriately priced – I loathe paying for channels I don’t watch – but it has yet to reach the point where I’m going to give up sports.

Even if I do want to watch sports online or through my laptop, I still need my cable subscription to gain access – think WatchESPN or the NCAA Tournament online offerings.

But what if you don’t like sports – and there are plenty of folks out there that don’t. Does cord-cutting become more realistic?

Yes, and no.

Yes because there are ways to watch most of your favorite shows through alternative methods, whether that’s through Hulu or Netflix or Amazon. The trend of binge-watching your favorite TV shows when they come out on DVD has become far more prevalent – yes, I’m subscribing to one trend while knocking another – and that gives people an out to watching TV.

But the no remains because it still costs you money. It’s not like Hulu Plus or Netflix are giving away their content for free, ya know?

And that is the essence of why cord-cutting is a myth – there is no way to get entertainment for free unless you’re stealing it. Maybe you’ll feel better giving Netflix $10 a month instead of giving ESPN $5, but you’re still paying something to somebody.

Is Netflix or Amazon somehow a less greedy corporate entity than Comcast? They are all in the same business of trying to take your money.

However, I must credit the streaming services because they have successfully positioned themselves as the “good guys” while Comcast and Time-Warner remained firmly implanted as the “bad guys,” usually of their own doing.

In the end, though, you can use facts to prove anything and the facts prove people are not cutting the cord.
In November, Business Insider ran an article with this headline: TV Is Dying, And Here Are The Stats That Prove It.

When I clicked on the link, I thought my thesis would be disproven. I was worried that the 1,000 word diatribe floating around my head. As I quickly scanned the article, I saw a lot of charts and fancy graphs that seemed to reveal that the TV audience is receding and that television is really dying.

Buried in the pretty pictures is this nugget: “All the major TV providers lost a collective 113,000 subscribers in Q3 2013.”

I did a triple take. That’s it?!? In fact, the industry added more than 200,000 subscribers in Q1!

In a world of roughly 112 million cable subscribers, the entire industry lost 0.1% of its base in 3 months.
If you made $50,000 in 2013, that would be the equivalent of losing $50. Would you consider your income “dying” if that happened?

In fact, the cord-cutting trend stories are actually obscuring the real story – people are leaving major cable companies for other, new-age distributors. Comcast and Time Warner are losing subscribers, while Dish, DirecTV, Verizon Fios and AT&T U-Verse are gaining customers.

Cable television is not dying – if it were ESPN wouldn’t be the world’s most valuable media brand.

Cable television is changing – and that’s the story  we should be tracking. Why are people moving to DirecTV? Why is AT&T U-Verse doing so well while Comcast is doing poorly?

Are there people out there cutting the cord? Yes. But there are not enough of them to be even statistically relevant. Switching from Comcast to Dish is not cutting the cord, it’s simply  buying a new one.

Will this end the cord-cutting phenomenon stories? Of course not. The easiest story to write is the trend story. 

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