Cord-cutting has been a phrase that has permeated the television industry for close to a decade. The Diffusion Group (TDG) predicted the rise of cord-cutting nearly 10 years ago when they published a report predicting that rising pay-TV prices and the growth of on-demand services would lead to an industry battle between over-the-top services (OTT) and traditional pay-TV services, like cable and satellite. Now, TDG has published a new report, Life Without Legacy Pay-TV: A Profile of U.S. Cord Cutters and Cord Nevers, that illustrates the massive growth in cord-cutters over the last two years.
According to this TDG study, more than half (52%) of Americans who have cut the cord, did so within the last two years. Perhaps even more impressively, a third of those people canceled in 2016 alone.
TDG co-founder, Michael Greeson, remarked that the relatively low cost of services like Hulu and Netflix have been integral in the continued growth of the cord-cutting movement, saying “Spending $70+/month for service that provides 2X value seems odd when you can pay $10/month for a service with 1X value,” notes Greeson. “The calculus of today’s TV subscriber has been radically altered by the presence of SVOD services like Netflix”.
All of this does not equate to a death sentence for more traditional pay-TV services like DISH Network or Comcast Cable. In fact, Greeson used Comcast as an example of how a legacy pay-TV provider can buck the cord-cutting trend and still be successful in today’s market.
“TDG observed long ago that incumbents were going to have to make a choice: either resign themselves to being a ‘dumb-pipe’ provider, or invest in using IP, change the TV experience, and become the go-to source for all things video. Comcast tuned into the later, investing in the hardware and software required to bring the power of IP to the legacy TV experience, and the company is now gaining video subscribers when others are reporting losses.”
Whether you believe Comcast can ride this storm or not, the reality is that cord-cutters are not going anywhere anytime soon. Cord-cutting is a trend that will not react to the industry, the industry is going to have to adapt to it. Traditional pay-TV companies can succeed in today’s market, but they are going to have to be a tad more creative to compete.