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  • Is Cord Cutting a Fantasy?

    April 15th, 2014

    The conventional wisdom goes that more and more people are ditching cable and satellite TV and taking the streaming video route. Certainly, the growth of Netflix is an example of a company plowing a different road and achieving great success. But it's largely about having award-winning original shows, such as the dark political thriller, "House of Cards," which are not available anywhere else.

    Indeed, there are loads of third-party networks that provide a wide range of TV programming. So if you want typical network fare, there's Hulu Plus," although you won't get your favorite shows at the same time they appear on a regular TV or cable channel. Apple TV offers several dozen apps or channels, or you can just rent typical pay-per-view movies and TV shows via iTunes. Roku offers hundreds of choices, some very obscure, but adding up to a positively huge range of programming choices.

    Regardless of which TV box you use, even the new Amazon Fire TV, cutting the cable cord is not easy. The shows you like, assuming they are available, may be divided among many separate services, each of which requires a subscription and perhaps a separate payment plan. You might even want to install an antenna for local stations, assuming you can get a decent signal.

    So at the end of the day, navigating through all these choices can be exceedingly complex.

    Compare that to the standard cable and satellite system. Regardless of the quality of the user interface on the set top box, you only need to navigate a single list of channels. If you want pay-per-view, it's part of the same list. This all-in-one smorgasbord of offerings can usually be searched, and every cable box with DVR capability lets you schedule shows you don't want to miss, and usually set up a full season with a few clicks of the remote.

    Now a big criticism of the way cable TV is marketed is the channel bundle. How often have you heard complaints that, out of over 300 choices, there's nothing to watch. Maybe you only want a few channels, but they are in different "tiers" or service levels, and thus you have to order a high-end package to get everything you want. So why can't the cable companies go a la carte?

    Well, it's not so simple. The entertainment companies offer channels to the cable companies as a package. You want SyFy and USA Network from Comcast, you've got to pay the carriage fees for others, such as CLOO (mostly crime procedurals, such as "Law & Order Criminal Intent") that have a far smaller audience.

    But I want to be fair to both sides. You see, a really great channel may go undiscovered if you didn't have it, but you might discover it when doing some channel surfing. That's how I happened upon USA Network in 2002 when I caught an episode of "Monk," a terrific comedy mystery series starring the great character actor Tony Shalhoub as a brilliant detective suffering from obessive/compulsive disorder.

    These days, the theory goes that the cable and satellite companies are having trouble selling their services to young people, who comprise a large portion of the audience for Netflix and other streaming services. Maybe they have a point. But it's also true that the younger generation has other priorities, such as school, working overtime to get ahead at the job or to build a business, or just starting a family. Budgets are tight, and it may come down to dinner or cable. As things settle down, perhaps they will, indeed, choose the simple approach, which is to take one of those great discount offers from the cable or satellite companies.

    Regardless, the theory goes that, with so many choices out there, traditional cable and satellite services are in a pickle, and customers are dropping like flies. You see all those enticing ads to sign up new customers. Perhaps they're desperate, and many of the customers are really conquests from other companies. Back and forth, as the offers change, and the long-term discount deals expire.

    Yet with all the competition from iTunes, Netflix, Hulu Plus, Amazon Instant Video and all the rest, the actual erosion in the number of cable subscribers is relatively modest. Recent surveys from Forrester Research indicate that only 6% of adults with online access have cut the cord. As you might expect, the percentage of cord cutters increases to 10% for those aged 18-24, with another 14% considering the jump from pay TV to net TV.

    With the growth of new households ordering up cable or satellite, however, the number of pay TV homes will reportedly drop from 91.8 households in the U.S. to 91.5 million by 2018.

    That's hardly an avalanche, and seems a natural consequence of the fact there are more programming choices fighting for your attention. So the cable industry can still look forward to a huge number of paying customers in the years that follow, although competition for the living room will become far more intense.

    It's not as if any of them are poised to go out of business tomorrow. You see, having that one-size-fits-all solution is actually a good idea, and the fight for new sign-ups means that the cable industry will add more features, such as multi-room capability, the ability to record up to six channels and more at a time, and smoother integration between your TV, the set top box, your smartphone and your iPad.

    This is the business that Apple wants to conquer, and while some have suggested it means an Apple TV set, it seems that it's more focused on the set top box for now. And, as I've said before, don't be surprised to see an Apple TV serve as the connection point for your cable company too.

    But it does appear as if the fears of mass cord cutting are, for now at least, rather overblown.



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    6 Responses to “Is Cord Cutting a Fantasy?”

    1. Ric says:

      Hi. My name is Ric, and I'm a cord-cutter. ("Hi, Ric!")

      Perhaps it's escaped your notice, there in New York, but Americans are getting poorer every day. And cable TV is enormously expensive. $100/month for 300 (or however many) channels may seem like a bargain, but if you only care to watch a half-dozen or so, then it's not so much. In other contexts, being forced to pay for things you don't want is called extortion. Just sayin'.

      Then there's the matter of customer service. By some surveys, Comcast is possibly the worst company in America. And Time-Warner is not far behind. (Why is it the kings of the digital era -- and here we can include the telcos as well -- are such awful companies with which to deal?) In addition to poor customer service, there are the bogus fees and such they charge. I still have never received an adequate explanation for the "DVR fee" I used to be charged -- I mean, what did TW actually do that merited a fee? I was already paying a separate charge to rent their DVR; what's a "DVR fee"? I'm the one who programmed it, what "service" did they provide? No one at TW could/would answer that question.

      Even the cable-only fees are outrageous when compared to the rest of the industrialized world. Low speeds, limited bandwidth, and the highest prices. Huh? We invented the internet! We should have the best service for the lowest prices.

      I think the demographic realities will negate all those rosy predictions regarding future growth in the cable TV industry. You have to be out of touch with reality to believe that Americans can continue to be gouged like this even if we were willing to suffer the abuse.

      I'm happy with my Apple TV and an $8/mo Netflix subscription (likely to go up now that Netflix has succumb to Comcast's protection racket). As much entertainment as anyone might need. At the end of the day, it's just TV: mostly entertainment, nothing all that important. We need to get our priorities straight. The corporations won't like that, but the things that matter in life have nothing to do with pleasing our corporate overlords. (I'm pretty sure about that....)

    2. You don't have to pay $100 for basic cable. There's always a low price to get you to switch -- or stay.

      Yes I know the cable companies have bad reputations and that some charges don't make sense.

      Peace,
      Gene

    3. Kaleberg says:

      We dropped cable when we realized it was costing us $900 a year and several of our favorite series had terminated. We now follow a number of series, but on an a la carte basis. The problem is that once you have quit cable, you are hard pressed to come up with an excuse for going back to it. We definitely don't want 300 channels, and we have no way of knowing which channels will have our future favorite shows. Besides, we are tired of being suckered in to watching a series only to have it canceled prematurely. We might as well wait and buy the whole season on DVD or online.

    4. […] “Is cord cutting a fantasy?: April 15th, 2014 The conventional wisdom goes that more and more people are ditching cable and satellite TV and taking the streaming video route. Certainly, the growth of Netflix is an example of a company plowing a different road and achieving great success.” — Read the article on technightowl.com > […]

    5. If it's a Fantasy then I'm living in Dream Land.

      I cut the cord January 2013. I now get most of my content for free, via antenna.

      Digital broadcasts added a feature known as "subchannels" which allows multiple channels to be broadcast on the same frequency that used to be used to transmit a single channel. In the early days of digital these subchannels were commonly used to show the weather radar or traffic cameras. Eventually these were replaced with new channels with scheduled content. This has really taken off of late - here in Houston I receive 100+ channels OTA.

      With the proliferation of channels, a number of them are showing series that originated on cable. I've been watching Burn Notice on channel 49-1, ION Television, which also broadcasts Monk as well as Law & Order Criminal Intent
      http://iontelevision.com/shows

      I supplement with additional content acquired from Amazon Prime, blu-ray, and iTunes. As of March 2014 I've saved $1792 (what I used to pay DirecTV less what I paid for additional content).

      I use a Mac mini to drive my HDTV. It records the shows I want to watch. I currently have a backlog of 950+ recordings (when I spot series like Burn Notice that look interesting, I set it to record but don't start watching until episode 1 shows up). With that much free content readily available, and that much savings already made, I see no reason to ever hook back up with cable or satellite.

      http://atariage.com/forums/blog/blog-148/cat-150-dvr-project

    6. jeff says:

      We cut cable tv in 2006 and have never looked back . Tice in that time cox has given me free basica cable for a year trying to get me back in the tv zombie group , without success . netflix and OTA channels take care of what little tv we watch .

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