mardi 10 avril 2012

TV américaine N°14: to cut or not to cut... the cord?

That is the question. And it is not an easy one to answer.

Why "cut the cord"? 
  • Economic reason: to save money (The "official poverty rate" is 15.1 % of Americans in 2010. Source: Census Bureau, September 2011). Monthly pay-TV bills average 73 $ (source: LRG, 2011) and 91.44 $ for cable + broadband (without add-ons or premium channels, of course. Source: SNL Kagan, Feb. 2012).
  • To regain some degrees of economic liberty: with free terrestrial TV (broadcast), you receive all the commercial networks available in your area (DMA) and their local stations; you get PBS as well as a few other stations (indies, etc.). Plus you can rent DVDs from kiosks (Redbox, etc.). No cord anymore (but how about the Web connection?)
  • Also, cord-cutting and unbundling have a transaction cost (paperwork, changing email address, phone number, etc.) which act as as barrier to exit.
Then come the numbers

How many TV households (TVHH) unsubscribe (churn rate), but also how many new subscribers? Among cord-cutters, how many moved for personal or professional reasons? How many moved into a nursing home? How many passed away?

According to the Convergence Consulting Group (April 2012), 1.05 million TVHH cut their subscription last year: in other words, 1% of subscribing TVHH. New subscribers were 0.11 million. All in all, since 2008, cable and satellite lost 2.65 million subscribers. Some of them now subscribe to telcos: U-verse (AT&T) or FIOS (Verizon). Some might subscribe to Netflix or Hulu+, etc. Anyway, these households did not cut the cord; they just switched cords (cf. Satellite, cable and connected TV). Nielsen call them "cord swappers".

Among the households that did unsubscribe, how many were "poor" customers who subscribed only to the cheapest services? MSO and satellite companies prefer usually to focus on "good" customers and they might want to lose "poor" customers in order to increase their margin with good ones - those who buy many services (DVR, multiroom equipment, triple play, etc.). Subscription management is more complex  than gaining or losing subscribers.

Among households without TV sets (3 to 4% of American households), how many subscribe to broadband and only watch on tablet, computers? According to Nielsen, their number is growing. Remains to be seen.

To make a long story short: there does not seem to be such a thing as cord-cutting. There is some cord swapping. Some people watch TV only on the Net. 

2 commentaires:

Bastien Crochet a dit…

Personally, I think they are three categories of households. First, there are poor households: those who subscribed only to the cheapest services and may “cut the cord” if the monthly TV bills they pay become unbearable. They are the real and actually the only cutters, and the numbers point out that they are a residual power (1% in 2011, according to the article).
At the opposite come the premium households. Most of the time rich households, they want the whole package: cable, broadband, add-ons, etc. Typically, a cliché would be a well-off family with children. These households are not the majority, but are definitely not cutters and I cannot imagine them switch cords, because they love the comfort of TV.
Then, between the poor and the premium, there are the addicted households: the ones who can’t cut the cord, because their favorite programs (Shows, sports, news…) are too important to be cut off. When they are poor, they prefer stop eating than giving up on them. And often, they find a way to subscribe to cheaper and equivalent services, like Fios or Hulu. That is why they are called “cord swappers”. Sometimes, they watch TV only on the Internet and don’t own a TV anymore. When they are rich, they don’t subscribe to premium services because this is not what matters to their eyes. These households, even if the numbers don’t claim it, are the majority and reveal us the growing trend: cord swapping. What if these cord swappers get rid of their TV? If so, will TV react? Will prices fall? Is this inescapable? These are the questions rising.

Ismael Dime a dit…

That may not harm TV providers because as it is said in the article TV programs providers are encouraging people to get free access. We can see it happen in France too. Look at commercials from Canal + and M6 too get full access to tv sitcoms, sport events. You don't even need to be registered as a canal + customer to get this acess. In my view it is the new way to face the keen competiition from hulu and other streaming platforms.