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%.
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.
But 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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