February 12, 2014
According to a new report from Forrester Research, the percentage of U.S. households with cable or satellite television is projected to dip from the current 82 percent to 79 percent by 2018. However, Forrester’s Jim Nail suggests that the television industry should not worry about cord-cutters, since those who opt to unsubscribe from cable services do not watch much TV anyway, and are not turning to online options but simply avoiding the cost. Business Insider counters that a decline is difficult to view as a win.
“With the rise of over-the-top video services, there has been much speculation that consumers will cancel their cable or satellite subscriptions — or ‘cut the cord’ — to watch all their programming via the Internet,” notes the Forrester report’s abstract. “But our data shows that these fears have been overblown and that any reduction in pay TV subscriptions has been driven more by the economic downturn than by new technologies.”
“Forrester believes that the future will hold small decreases for pay TV providers, mainly among younger viewers who delay or forgo subscribing,” the report continues. “But for most viewers, the ease of knowing exactly where their favorite programs are, the improved content access, and the annoyance of managing multiple small subscriptions will outweigh what, in the end, will be minimal savings.”
In the report, Jim Nail predicts a steady decline over the next five years in households that subscribe to pay TV services.
“I don’t know that cable execs would consider a three-point decline a ‘win,’ but it’s not the inevitable death Business Insider and other publications have been writing about,” suggests Aaron Taube for BI.
Nail’s argument is that a significant amount of popular, first-run TV content is not available without a subscription and that Internet-connected smart TVs are too challenging for many consumers to operate in order to become a replacement for cable.
“To some extent, the report is absolutely correct,” writes Taube, citing the rights television networks have to the majority of popular content.
“But where Nail’s thesis is flawed is in assuming that broadcast and cable networks will forever have the best content,” Taube notes. “Already, Netflix’s investment in original content has borne fruit in the form of hit shows ‘House of Cards’ and ‘Orange is the New Black,’ and the democratization of the Web has opened up YouTube to young and hungry content creators around the world.”
He further argues that consumers will soon become more comfortable using smart TVs and accessing content via connected devices such as Microsoft’s Xbox or Google’s Chromecast.
While the average American watches more than 35 hours of TV each week, that figure is elevated by the habits of older viewers. The 25-34 demographic only averages about 26 hours per week, which is down 15 percent from two and a half years ago.
“So, no, you are not about to wake up tomorrow in a world where nobody you know has cable,” predicts Taube. “But alternative, Internet-enabled content platforms will continue to proliferate, and their quality and ease of access will only improve from here.”