The Cord-Cutting Phenomenon Part 1: Challenges and Opportunities for Programming Providers

The Cord-Cutting Phenomenon Part 1: Challenges and Opportunities for Programming Providers

Cord cutting (abandoning traditional wired pay TV services like cable, fiber, and satellite)  carries with it a ton of implications – for the customers themselves, for wired providers, for streaming and other non-traditional providers, for networks/content providers, for advertisers, and pretty much anyone that touches programming in some way. And because of this, the topic has been receiving a significant amount of attention over the past few years. Articles signaling doom and gloom for traditional providers abound.

As of writing this post, a simple Google search for the term “cord cutting” unearthed articles touting the growing popularity of cord-cutting, predicting bleak futures for cable providers , and outlining the negative effects this phenomenon is having on cable stock prices. Traditional cable, fiber, and satellite providers must be petrified to read the news these days.

And this was what led us to conduct our most-recent Invoke Live session report. We wanted to understand not only the prevalence of cord-cutting, but also what was driving this phenomenon and the attitudes/behaviors surrounding not only these traditional providers, but also streaming on-demand providers such as Netflix and Amazon and virtual multichannel video programming distributors (vMVPDs) such as Sling, DirectTV Now and Hulu Live. There is obviously already a lot of existing chatter around this subject, but we thought an Invoke Live session could help provide some much-needed depth through our real-time “Big Qual” method.

The current situation

Out of the roughly 100  viewers we recruited for the session (only requirement to be considered a “viewer” – must watch at least 1 hour of programming a week, through any method), 20% claim to have cut the cord on traditional wired Pay TV providers (Figure 1) and 35% are planning to in the future (17% say they will in the next year or so.)

Figurre 1 – Have you or are you planning to cut the cord with traditional cable/fiber/satellite?

So in essence, that is over half of viewers that have already cut the cord or plan to do so in the future. Not surprisingly, cord-cutting appears to trend younger with 65% of Post-Millennials/Millennials having already cut the cord or planning to do so and 55% of GenX’ers saying the same. This should indeed be concerning for traditional providers.

And the chart below doesn’t tell any better of a story for these providers. Looking at those that have already cut the cord, 100% of them feel great or very good about their decision to do so, with the bulk of them falling in the “feeling great” category (Figure 2).

Figure 2 – How do you feel about the decision to cut the cord? – filtered by cord cutters (n=17)

Obviously, this Is a small sample size (n=17 that have cut the cord) but still to have ALL OF THEM satisfied with their decision doesn’t paint any pictures of cutter’s remorse or repentant viewers rushing back to their cable providers any time soon.

It often comes down to value, not just cost – and traditional providers are not delivering

The common theory is that viewers are cutting the cord for pretty much one main reason – rising costs.

And many viewers did cite cost as a driving reason why they have cut the cord or are considering doing so. But quite often, cost isn’t the only reason. More commonly, viewers are talking about the cost of traditional providers coupled with a feeling of decreased value they are getting for their money. By this, I mean viewers say things like the following when asked why they have or are considering cutting the cord:

“I am considering it because I see the value of cable going down and access to things being offered elsewhere.”

“…the monthly cost kept getting more and more expensive with no improvement in programming options.

I could not justify paying that much for 200 or so channels of which we actually watched maybe 10 or 15. Ridiculous.”

“I can stream for the same amount or even less and get more for my money.”

As you can see from the above quotes, these viewers aren’t simply going for the lower-cost alternative. They are conducting a sort of value analysis – both on their wired provider (Am I getting what I am paying for? Am I paying for things I don’t need?) and on other methods (Would services such as streaming offer me more bang for my buck? Can I get a similar product elsewhere for less money?) and often coming to the conclusion that traditional providers are simply often not delivering a good value for their money.

In fact, this idea of value is often what contributes to viewer opinion of traditional wired providers. When asked how traditional cable/fiber/satellite providers have changed over the past few years, viewers are essentially split – with 37% saying they have improved, 36% saying they have not changed, and 28% saying they have gotten worse

Those numbers, on their own, would probably not be all that concerning to cable companies. Until you look at that same question for streaming on-demand providers. Looking at responses to the same question for streaming providers, 71% say they have improved, 27% say they have not changed, and 2% say they have gotten worse (Figure 3)

Figure 3 – How have these providers changed over the past 3 years? (n=90)

Obviously, viewers’ have an increasingly more positive attitude towards streaming providers than they do towards cable/fiber/satellite providers. And the most common reason for a declining opinion of traditional providers? A feeling of increased cost and decreased benefit (essentially, declining value.)  And content is often where these viewers are defining value

“They keep jacking up the prices and no new channels for the higher prices.”

“The cost[s] continue to rise and the channels you want are not always in the most affordable package…”

But this isn’t the end of the story. Keep an eye out for my next blog post, which will explore how traditional wired providers can start to curb this cord-cutting phenomenon and how streaming providers can build on this momentum they’ve been riding.

In the meantime, check out the report from the session here

Wayne Goodreau About the author

Wayne Goodreau has been in the market research industry since the year 2000, working on both the vendor and client side across a number of qualitative and quantitative methodologies. Joining Invoke in 2011 and currently employed as Research Director, Wayne has since worked with a number of Invoke’s clients helping them better understand their consumers and customers through the power of large-scale real-time decision making.

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