While cord cutting does worry many TV industry executives, it's happening at such a glacial pace that many feel they'll have ample time to manage the phenomenon. Cord shaving -- or the act of cutting back on bundle options and channels -- is a much more immediate threat. Data compiled by Nielsen and the Wall Street Journal indicates that the top 40 viewed channels (icluding ESPN, USA and CNN) have lost an average of 3.2 million subscribers -- or around 3% of their distribution.
While the pay TV sector did see its first ever annual decline on record last year when it lost 166,000 subscribers, cord cutting isn't enough to generate those kinds of channel viewership reductions. Instead, the lion's share of these losses are due to users flocking to smaller, less expensive bundles:
quote:
A growing share of pay-TV customers are signing up for smaller, cheaper bundles of channels that cost anywhere from $10 to $50 a month and don’t include popular channels like TNT, USA, ESPN, CNN, Fox News, Disney Channel and Discovery Channel, the industry executives say. “What we are seeing is some cord cutting and some cord shaving,” said Stephen Hasker, global president of Nielsen. “Consumer time and attention is shifting.”
Some TV executives tell the Journal that they're not
that worried because they're recouping any financial losses in the form of higher retransmission fees. But as we've seen with recent reports about
smaller and mid-sized cable companies backing away from offering TV entirely, and companies like Suddenlink
refusing to pay retrans hikes, the status quo of profits simply isn't sustainable.It's going to be an interesting next years or so for broadcasters, cable companies and consumers. As the traditional business model implodes, broadcasters are going to increasingly embrace online options (like A&E is already). As cable operators themselves lose money from declining TV subscriptions and the elimination of cable voice lines to cut costs, they'll likely turn to just one thing to keep those quarterly returns coming:
usage caps.
