According to a new report from Moffett Research, pay TV services in the United States lost 316,000 subscribers between June of 2012 and June of this year. According to a story in Variety, Craig Moffett was quoted as saying, “Cord cutting used to be an urban myth. It isn’t anymore. The numbers aren’t huge, but they are statistically significant.”
According to the story, Leichtman Research Group determined that subscribers rolls declined by 80,000 Y-Y through the first quarter of 2013. While “cord cutters” have been talked about for several years, they’ve never been statistically important – until now.
Cable TV system operators took the biggest hit, dropping 591,000 video subscriptions in Q2 ’13. AT&T’s U-Verse and Verizon’s FiOS services added 371,000 subs in the same time period, while DirecTV and Dish saw a total of 162,000 customers bail out.
There are many possible reasons, but personal experience makes a strong case that pay TV services are just too expensive. I signed up for Comcast’s Triple Play a few years back when I shut down my Verizon landline service. After asking about the monthly price without any promotional discounts, I was looking at about $140/month for two phone lines, Internet, and two digital TV channel tiers.
In a few years, that had crept up to nearly $185 per month. In the meantime, Verizon came through and “nuked” our neighborhood while pulling optical fiber, leaving a bad taste in everyone’s mouth. But they did pick up a couple of my neighbors, and several times each month, I get mailers advertising rock-bottom “triple play” FiOS deals in the neighborhood of $90 per month.
It was a useful negotiating chip to have when I called Comcast in June and complained about being raked over the coals. The result? An immediate $40 rebate for the month of July and a $30 drop in my monthly bills.
I always have the option of saying “No!” to Comcast and dumping the channel packages. True, I’d lose access to Top Gear, Copper, Homeland, The Amerikans, Dexter, Breaking Bad, Mad Men, and other cable-only shows. But I could keep my broadband package and supplement it with over-the-air TV (my rooftop antenna system reliably picks up stations from Philadelphia and New York City). And I could stream these popular programs later in their runs, or buy them as digital downloads.
Apparently, that’s what more subscribers appear to be doing – forgoing costly channel packages for day-after streaming and season-after downloads of popular shows. The concept of ‘water cooler talk’ about hit shows seems to becoming an anachronism, as more people telecommute. And of course, younger generations of viewers, many of whom are saddled with college and other debt, are always looking for ways to save money, such as Netflix and Amazon Prime streaming.
For several years now, we’ve heard from top pay TV executives that cord-cutting is a myth, or insignificant, and that younger viewers will return to traditional pay TV subscriptions when they form families and buy houses.
Well, it ain’t happening that way. Gen Ys are more comfortable streaming to tablets and computers, and value high-speed broadband more than “all you can eat” TV channel packages. The big pay TV providers have been whistling past the graveyard for some time now. Maybe they should start running…
Posted by Pete Putman, August 12, 2013 12:55 PM
About Pete PutmanPeter Putman is the president of ROAM Consulting L.L.C. His company provides training, marketing communications, and product testing/development services to manufacturers, dealers, and end-users of displays, display interfaces, and related products.
Pete edits and publishes HDTVexpert.com, a Web blog focused on digital TV, HDTV, and display technologies. He is also a columnist for Pro AV magazine, the leading trade publication for commercial AV systems integrators.