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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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