Cutting the Cord

cord_small (1)It’s 2015, and most of us have at least heard the term cord cutters. They’re consumers who have chosen to cancel their cable or satellite TV service in favor of internet-based streaming media (or simply popping old school discs into their Blu-ray players).

About nine years ago, after struggling with Time Warner Cable for years—and the company spending literally thousand of dollars trenching new coaxial at our curb in an effort to remedy our digital cable woes—my family cut the cord. We’ve never looked back. We were paying about $90 a month. That equals roughly $10,000 in savings. Wow.

It was a relatively daring and unusual move a decade ago. Our motivation wasn’t simply to rid ourselves of the quality headaches we were experiencing with Time Warner, but also to alleviate the pain of commercials. Our children were young and we felt good about virtually eliminating their exposure to the incessant stream of ads that run on television. Admittedly, it would have been challenging if we had been big sports fans (today, services like MLB.TV and NFL Now help ease that pain).

It’s estimated that only 6.5% of Americans (about 20 million people) are cord cutters (according to Experian Marketing Services). While still small as a percentage, this rapidly growing market segment has caught the attention of some tech and media corporations. TiVo, for example, recently introduced a DVR aimed at cord cutters that will record shows for those lacking cable TV. Features of established entertainment channels, like HBO GO and Showtime Anytime—while they don’t cater specifically to cord cutters—help bridge the gap between conventional cable or satellite TV and the mobile device-toting cord cutter lifestyle.

In June 2014, the Leichtman Research Group reported that nearly half of U.S. households subscribe to Netflix, Hulu Plus, or Amazon Prime (or, as is often the case, a combination of these services). In 2010, this number was only 24%.

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A study released by the Consumer Electronics Association (CEA) in 2014 supports these numbers. The organization claims that 45% of American households watch streaming video from the internet on their TVs. In 2013, it was only 28%. Something is trending, folks. While the CEA study revealed that only about five million American homes rely on internet TV exclusively, 10% of all TV-consuming households said they’re probably going to cancel their cable or satellite TV service in the next 10 months. Should Comcast, Cox, and AT&T be nervous?

More proof of this trend? In May 2014, The Verge reported that 500 of those ubiquitous Redbox kiosks we’re all so acclimated to seeing will disappear this year. Americans want to stream a significant portion of their entertainment content—regardless of whether they’re cord cutters or not.

Britain’s The Guardian recently surveyed North American cable and satellite TV customers who had chosen to cut the cord. A former Comcast customer in Marysville, California stated, “After a traumatizing series of bad customer service experiences, I decided I’d rather sit in a dark cave than give [Comcast] another dime. Not one regret.” A disgruntled former Shaw Communications customer from Alberta, Canada, said, “I didn’t want to be the person who stayed up until 2 a.m. watching the magic bullet blender commercial over and over and over again.” An ex-cable subscriber in St. Louis echoed this sentiment: “I have a busy life and sitting through commercials is something I am not interested in.”

One of the biggest complaints of consumers is paying for hundreds of channels on cable, but watching only a few. Advocates of TV reform have called for a la carte channel packages for years. A recent study by Nielsen reported that the average U.S. home receives 189 cable channels. And how many of those do they actually watch? Only 17 (that’s less than 9%). In addition, The Guardian survey revealed that only 3% of cord cutters would consider going back to cable if providers began offering a la carte pricing. The lack of a la carte is obviously only part of a much larger discontent.

fire tv stickBut let’s be fair: Cutting the cord doesn’t simply erase your cable bill. Consumers often are compelled to spend more for better internet bandwidth and a streaming video device or two (like a Roku or Apple TV) to compensate for their lack of cable or satellite service. There’s also subscription fees for services like Netflix and Hulu Plus and rental costs for iTunes or Vudu.

So let’s do some quick math. I got rid of Time Warner Cable at $90 a month and later subscribed to Netflix ($9 a month) and Hulu Plus ($8 a month). I spend $10-20 per month at my local Family Video store (because you can’t feed anything to your home theater better than a Blu-ray disc). A few times a month, my family also rents movies or TV episodes from Google Play Movies & TV or iTunes at $3-6 a pop. But we never spend $90 a month. And the commercial interruptions we tolerate are light (basically just Hulu Plus, which features far fewer than conventional TV).

No, cord cutting isn’t free. For that, you’ll need a rooftop or desktop antenna to pull in your local affiliate stations. But the value proposition of cord cutting is so great that it’s hard to ignore. The fact that it’s less expensive than cable and features few or no commercials makes cutting the cord an increasingly appealing alternative for middle class consumers.

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Curt Robbins


Curt Robbins is author of the following books from Amazon Kindle:

You can follow him on Twitter at @CurtARobbins, read his AV-related blog posts at rAVe Publications, and view his photos on Flickr.

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Innovation: Not a Purple Pencil

Companies today are obsessed with innovation. As they should be. Call it a “paradigm shift,” “disruption,” or simply a “new age.” It’s all the same. If publish or perish is the mantra of academics, then smart companies should be preaching “disrupt or die.”

Marketing efforts prevail, however. Middle class consumers are continually told that the companies from which they purchase goods and services are innovative. But innovation isn’t a #2 pencil on which a company slaps a coat of purple instead of yellow paint. Innovation is a mechanical pencil you can re-use forever, simply purchasing new lead (especially when we’re running out of trees).

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Innovation isn’t a slightly better something, it’s a new something. True innovation from companies is customer-centric. It isn’t the Chevy Volt, with a battery pack cozying up to an internal combustion engine. It’s a fully electric Tesla Model S or a Nissan Leaf, with zero engine noise, more storage space, and connectivity to your smartphone. Disruption isn’t Comcast or Time Warner Cable offering on-demand video streaming or more digital channels. It’s Netflix and Vudu turning the industry upside down and encouraging cord cutting. Improving things for consumers isn’t Hewlett-Packard or Dell cranking out laptops with faster chips and higher resolution screens. It’s Apple, Samsung, and Google producing leading-edge mobile devices and wearables—and making them interactive with our homes and vehicles.

Innovation comes from companies like Netflix, Tesla Motors, Apple, and USAA. It was USAA, the financial services company serving primarily military customers, that introduced taking a photo of a cheque to deposit it. Why was it the little guy, USAA, that developed this consumer-friendly and extremely practical “technology”? Where were Bank of America and Citibank, with their voluminous resources? Probably on the golf course or lobbying in D.C., not forming research labs to produce such consumer-friendly and competition-smashing tech.

In a recent blog post, I discussed the lack of innovation in the auto industry. The proof? Nearly all cars seem the same. Most people I know can ride to lunch with a friend and, after returning, not be able to tell you the brand of car in which they were transported. Yet we can identify an iPad from across the street. While standardization is important, especially for safety, this reflects laziness among the executive ranks of so many companies. For the auto industry specifically, it seems they’d rather play copy cat than focus on real innovation. Innovation isn’t marketing BS. It’s customers and owners telling their co-workers and neighbors “You gotta get one of these!” When was the last time someone told you that regarding their car, lawn mower, or laptop computer?

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The Fremont, California manufacturing facility now occupied by Tesla Motors was previously a GM/Toyota partnership. This is wonderfully symbolic of the changes we’re about to witness in the auto industry. If you think disruption is just Pandora and Snapchat, think again. Let competitors partner on bland products that motivate consumers to say meh and dread the experience of a visit to their local car dealership or Best Buy. Meanwhile, companies like Tesla Motors, Netflix, Apple, and Google will build the new world atop the boneyard of the old dinosaurs. It’s the phoenix from the ashes, and it’s happening right in front of us.

Don’t partner with your competitors—defeat them. Innovate, disrupt, and blow the other guys away. Yes, there are valid opportunities for “coopetition.” Industry consortiums and standards groups are sometimes essential to progress in the marketplace and the interoperability of products and services from different companies. But allowing the accountants to navigate the ship, relying on economies of scale and rationalized partnerships with your enemies is short-term, borderline desperate thinking.

In today’s world, true innovation is disruptive, sustainable, and genuinely enticing to consumers. The only reason most of us aren’t parking a Tesla Model S in our garage is because of the relatively high cost (a topic about which co-founder and CEO Elon Musk has been very honest). But what about 2017, when Tesla introduces it’s roughly $35,000 Model 3? What about when Nissan gets the Leaf to crank out more than 200 miles from a single charge? What? You don’t want a car that produces virtually no sound, features more storage, produces no harmful exhaust, is super-sporty and fast, and costs a fraction of what’s required for gas-powered vehicles to fuel and maintain? Please forgive my cavalier attitude, but I’d say you’re freaking nuts.

If the company for which you work desires to survive and thrive in the 21st century, it must embrace this spirit of ultra-competitive and reality-based innovation. If it doesn’t, the new guys are going to be purchasing your office building or manufacturing facility to produce what middle class consumers really want—and your company will be relegated to nothing more than an obscure Wikipedia entry.

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Curt Robbins


Curt Robbins is author of the following books from Amazon Kindle:

You can follow him on Twitter at @CurtARobbins, read his AV-related blog posts at rAVe Publications, and view his photos on Flickr.