News & Analysis
Cord Cutting: The Tech Media Blows Another One
By Swanni
Washington, D.C. (March 12, 2013) -
Nielsen estimates that the number of people who have dropped
their pay TV services to watch video online has increased by
just three million over the last six years. That's an average of
500,000 a year, which would be less than one percent of the pay
TV audience each year.
The relatively small number of 'cord cutters' will likely
surprise some tech journalists and Wall Street analysts who have
frequently written and opined that dropping pay TV service is a
rapidly growing American phenomenon.
For example,
Engadget.com
published an editorial in 2012 under the headline, "Cutting The
Cable Cord Is a Young Trend Going In the Right Direction." The
editorial stated: "Cable companies are not losing sleep but they
should be having bad dreams."
But in report called 'Zero TV,' Nielsen said slightly more
than two million people were cord cutters in 2007 with the
number rising to just five million in 2013. Nielsen acknowledged
that's a "small group" with 95 percent of U.S. viewers still
getting their information and entertainment from traditional pay
TV services.
The company added that the so-called Zero TV household still
watches online video and uses their TVs for gaming and other
entertainment. In fact, 75 percent of the Zero TV audience still
have at least one TV, Nielsen said.
The Zero TV audience also skews young with 44.4 percent under
the age of 34 and 19.3 percent under 25. And the Zero TV viewer
is also more likely to be single, live alone and have no
children.
It appears that cord cutters are also cutting the cord in part
because they can't afford to pay for a traditional TV service.
"To
some extent, this group is responding to the downturn in the
economy which has coincided with the ubiquity of alternative
viewing options. For 36 percent, cost was the primary reason for
cutting the cord, but interestingly, 'lack of interest'
was a close second at 31 percent," Nielsen said.
In a related study, SNL Kagan said yesterday that pay TV
providers added 46,000 subscribers in 2012, which was down from
280,000 in 2011 but still suggests that only a small number of
consumers are cutting the cord.
Nielsen added that the average American spends more than 41
hours each week "engaging with content across all screens." They
spend most of that time (more than 34 hours) in front of a TV
and consumers spend three of those TV hours watching
time-shifted content on DVRs and other devices.
Analysis:
Will this study finally -- finally! -- shut up the chorus of
cord cutting advocates? Probably not. But both the Nielsen study
and the SNL Kagan report undeniably shows that the number of
people dropping their pay TV service is miniscule and has been
for some time. Cord cutting as a trend is a myth, perhaps the
biggest technology-related myth the tech and mainstream media
has perpetuated in some time.
If there was ever a time when millions and millions of people
would drop their pay TV service, it was between 2007 and 2013
when the nation's economy has suffered from a deep recession and
chronic unemployment. But only three million additional people
decided to cut the cord during that time, according to Nielsen.
That should tell you everything you need to know about the
so-called cord cutting phenomenon:
It doesn't exist.
Of course, this isn't the first time that the tech media and the
Wall Street analysts were proven wrong on a major tech issue of
the day. And it won't be the last. Too often, they think that
because they like something -- or their neighbors in New York,
Silicon Valley, Los Angeles, etc. like something -- that
everyone will like it. But it's not true. Generally speaking,
they do not reflect the tastes of the nation. Instead, their
opinions are myopic and reinforced by talking to people in the
same zip codes.
Also See: Top 100 Blu-Ray
Players
Today's 10 Best-Selling Blu-ray
Titles