Cable and the state of cord-cutting
As Americans, we have many choices. We like our choices. We are, happily, not North Korea. There is not one bar of chocolate at the grocery store labeled “Chocolate.” There’s dark chocolate, milk chocolate, white chocolate, raspberry-filled chocolate bars, and chocolate-covered espresso beans. And that’s just in my desk. Having a lot of choices is an intrinsic part of the American marketplace.
But when it comes to cable, we haven’t always had the freedom we desire. Only need ESPN and TNT? Too bad, you’re paying for another 150 channels. We have been forced to pay for channels we don’t want. That is until Netflix opened the door to alternate viewing options and changed the way we consume media. No longer is the consumer restricted to network schedules. We can watch what we want, when we want, and binge for as many episodes as we can stand. Along with Netflix, Hulu and Amazon Prime have also started to provide more choices and incentives to cutting the cable cord.
Earlier this year, HBO became the first big network to offer a subscription service consumers can buy without having a cable contract (known as OTT or Over the Top). Showtime has announced their plan for a similar product that will be available by the end of 2015. As more networks develop their own stand-alone subscription services, these could well be the last days of TV as we know it.
Millennials, a most coveted demographic, will begin to cut the cord in droves. In fact, they already have. A report by comScore found that in 2013, 12.4% of millennials had already quit their cable subscription, up from 7.9% in 2010. Many millennials who still subscribe to cable only do so for access to sports. If networks like ESPN, TNT, and TBS were to offer subscription packages, we would likely see an even far greater percentage of millennials leaving cable behind.
If this does happen, then cable brands will have two choices: 1) Continue down their current path, supported in large part by the revenue captured from baby boomers, or 2) Satisfy the desire of millennials and the vast majority of consumers of any age who want choice at the channel level. Cable brands that stay the course, opting for the first path, may continue to enjoy short-term profits from an ever-aging population, but for how long? The better, longer-term bet is on those cable brands willing to listen to the voices of their born-digital customers and give them the freedom of choice they are demanding.