The concept of “watching television,” now over 70 years old, continues to evolve away from traditional, scheduled mass audience broadcasts through the ether to multi-channel delivery over wired connections. And the next stage in that evolutionary process is picking up steam.
That next stage would be cord-cutting, the practice of discontinuing linear pay TV program services in favor of Internet delivery of video in an “any time, any place, any viewing device” format. Pay TV service providers have long scoffed at the impact of cord-cutters, stating that as younger viewers mature and form families, they will return to traditional pay TV services with monthly subscription fees.
Well, the executives of pay TV service providers sound more and more like they’re whistling past the graveyard these days. In a recent story on the eMarketer Web site, 60% of U.S. respondents to a study conducted by market research firm AYTM stated that they still had a pay TV subscription to go along with their broadband service.
However, another 23% of Internet users said they had dropped their multi-channel video service, while 17% responded that they didn’t have any TV service at all. The combined 40% who either cut the cord or don’t watch pay TV is the highest number I’ve seen to date in surveys of cord-cutting trends.
A Leichtman Research Group study conducted back in March found that 27% of U.S. adults watched videos on non-TV devices every day and more than half of survey respondents did so on a weekly basis. AYTM’s study dug a bit further and discovered that found that 29% of respondents watched YouTube videos at least daily in May, and more than half of respondents did so more than once a week.
According to AYTM, over half of cable TV viewers said they watched less than half of the channels available via their subscription and 74% said they would prefer to choose individual channels rather than paying for a whole bundle. Until recently, there was no chance of a la carte channel pricing, but broadband video channels are now providing that option.
Not surprisingly, the most popular broadband video service is Netflix. Leichtman’s numbers showed that 22% of respondents stream Netflix content weekly, up from 4% in 2010. That is an incredible growth rate and the main reason why Netflix’ subscriber base is rapidly closing in on 30 million customers.
The controversial Aereo DTTB-to-Internet service, which recently launched in Boston, has plans to expand to several other cities this year. But the end game may not be broadcast TV redistribution after all.
According to a story on the Advanced Television Web site, Aereo boss Barry Diller’s game plan is to break up controlled, centralized video distribution systems (broadcast, cable, satellite, and fiber) and move all content to Internet delivery. Diller was quoted in the story as saying, “The more you can get all forms of video over Internet Protocol; the better off the world is going to be.”
Let’s ignore some of the logical and technical fallacies in that statement and see if this goal is even realistic. You may be surprised to learn that true high-speed broadband service is only available to a relatively small percentage of the population. An FCC study published last year said that less than 10% of U.S. households could count on sustained data rates of 2 – 3 megabits per second all day long.
Ironically, broadband speed enhancements are largely coming from pay TV system operators, who may be shooting themselves in the foot as they try to keep up with Verizon and Google Fiber: Speed up broadband service, and you speed up the exodus from pay TV subscriptions to Internet-only services as consumers try to cut their ever-escalating monthly bills.
Advanced codecs like H.265, which promises a 50% bit rate reduction over H.264 and which will start to roll out next year, will only hasten this process as consumers fully embrace “anytime, anywhere” Internet video. Abandon ship!
Posted by Pete Putman, June 4, 2013 7:10 AM
About Pete PutmanPeter Putman is the president of ROAM Consulting L.L.C. His company provides training, marketing communications, and product testing/development services to manufacturers, dealers, and end-users of displays, display interfaces, and related products.
Pete edits and publishes HDTVexpert.com, a Web blog focused on digital TV, HDTV, and display technologies. He is also a columnist for Pro AV magazine, the leading trade publication for commercial AV systems integrators.