Death of cable by 'cord cutting' is greatly exaggerated


A report last week from Experian--known to working-class folks everywhere as the brand name atop our credit reports--concluded that some 7.6 million U.S. households, or 6.5 percent of the total, cancelled their pay TV service from cable or satellite providers, and that as many as a third of those have opted instead for Internet TV "over-the-top" (OTT) services from providers such as Apple TV and Roku.

That report led to stories confirming the impending death of cable TV.

But a closer examination of how Experian explains its data reveals that its analysts may have jumped to an extreme conclusion: namely, that literally everyone who does not presently subscribe to a multi-channel service provider has cancelled that service at some point.

FierceEnterpriseCommunications confirmed that view of Experian's analysis with veteran entertainment and broadband media analyst Bruce Leichtman, principal with Leichtman Research Group, Inc.

"This massive cord-cutting never really happened," states Leichtman in an interview. "Because it never happened to the degree that many predicted-slash-hoped for, we have thus redefined what cord-cutting is."

As the Experian report puts it:

"An estimated 6.5 percent of U.S. households (7.6 million homes) today are considered 'cord-cutters,' meaning they have high speed Internet but no cable or satellite television service. That's up from 4.5 percent of households (5.1 million homes) in 2010, a relative increase of 44 percent. While the term cord-cutter implies that a household had a cable or satellite TV subscription that was cancelled, young adults starting out on their own for the first time may never pay for TV service."

Experian's data on the number of households with no cable or satellite television service does correlate to some degree with Leichtman, who estimates that number closer to 9 percent. But Leichtman stopped short of declaring that the entire 9 percent abandoned some pay TV service in the past.

What's more, in-between Leichtman's and Experian's numbers are figures from the Consumer Electronics Association, which conclude that some 7 percent of U.S. households rely solely upon broadcast antennas for their television programming. The National Association of Broadcasters touts figures that are significantly higher.

At any rate, there appears to be plenty of both data and experience to suggest that Experian's 6.5 percent number--which may very well be accurate--should not necessarily "imply" the abandonment of multi-channel service.

"What cord-cutting was supposed to be five years ago," Leichtman continues, "was somebody who disconnected their pay TV service because of what's available online. It never really happened to a large degree." He then pointed to a survey of Canadian households by Convergence Consulting earlier this month, which reached the same implication about the data it collected.

"They're non-subscribers! They're what we would've called ten years ago 'non-subs,'" he adds. "So we've redefined a non-sub as a cord-cutter. And it's imprudent to think that, just because somebody has broadband and does not have multi-channel video, that they are a 'cord-cutter.' Some of them may be non-subscribers because they can watch video online, but the majority of them are just non-subscribers. And the majority of those who 'cut the cord' do it for economic reasons."

The cord-cutting trend actually dates back a few decades, notes the veteran analyst, who was among those collecting the data at that time to prove it. The trend actually predates the arrival of online content as an alternative, only now services such as Hulu and Netflix provide new cord-cutting incentives. "They've got some content they can cobble together as non-subscribers," Leichtman says, though in his experience analyzing this trend, he also notes that cords don't always remain cut. "It's not a permanent situation, either. There are constantly people going in and out of the category."

For more:
- read the Experian report
- the Huffington Post story
- Leichtman Research Group's stats
- the article on Canadian 'cord cutting'

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