Evidently, the revolution hasn’t started yet. My army of cord-cutters has yet to march up and stand by my side. According to industry analyst Craig Moffett, they’re actually going the other way, back to the multichannel mothership.
In a recent report, the Bernstein Research analyst said cable, telco and satellite TV companies reporting their fourth-quarter results collectively added 441,000 subscribers during that period, up from the 396,000 subscribers added in the year-ago quarter.
So you’re telling me that, in the face of the worst economy in decades, people are shelling out more money for something they can get for free online?
Indeed. Mr. Moffett says cord-cutting “remains the province of urban myth.”
I’ll concede the numbers support his position. But let’s take a closer look at who’s gaining.
Here’s his breakdown:
Time Warner Cable -119,000
What we have are consumers leaving cable and turning to satellite and telcos. Satellite companies have always campaigned harder on the value proposition and most offer better overall pricing than cable companies. As for the telcos, well, I got a flyer from one of them last week offering to pay me to sign up for its video services. (On a side note, telcos are suffering severe land-line losses as consumers ditch their wired phones, while cablers are picking up a fair amount of new voice customers.)
My point, though, is that price sensitivity is alive and well when it comes to video. Does that mean job losses in the fourth quarter drove up multichannel subscriptions?
Recent Nielsen data supports this couch-potato theory.
Nielsen said TV viewership clocked in at a record 151 hours per month in the fourth quarter, up from 140 hours in the third quarter. “[It’s] a jump that Nielsen doesn’t explain, but which I can only ascribe to the growing ranks of the unemployed spending more time in front of the tube,” said Will Richmond, analyst with VideoNuze.com, in his report on the subject.
The jump also may be due to the fall season. But it’s worth asking if the growing ranks of unemployed are the ones migrating from cable to satellite and telcos.
Mr. Richmond pointed out that Nielsen’s data supports the possibility of cord-cutting for the 18-to-34 demographic because that group watches five hours of video online per month compared with about 118 hours on traditional TV, the highest ratio of any age group.
Maybe it’s a good thing that online video’s not quite ready for primetime yet. After all, Hulu recently yanked its content from competitor TV.com and Web-to-TV software service Boxee at the request of content owners, a move that could set in a motion of flurry of rights battles over online video this year.
“All of this is part of something I call the coming online video backlash,” said James McQuivey, analyst with Forrester Research. “It’s going to take this whole year, and it’s going to inspire a lot of hasty moves on the part of TV executives to pull previously available content. And consumers are going to hate it.”
The first-quarter numbers from multichannel providers will be the real proof of the urban myth of cord-cutting. We were still living on borrowed time in the fall, distracted by an election, unsure of the depth of the recession. Now that the recession has dug its heels in, will more consumers move away from cable and satellite this quarter? And can the Web portals handle it if they do?
The last thing online video needs is a hating consumer.