Are One in Four of You Really Going to Cut Cable and Switch to Web Video?

January 3, 2011 at 10:18 am PT

May as well kick off the new year by restarting the cord-cutting debate: Are people really dropping their cable subscriptions in favor of the Internet and some combination of Netflix/Hulu/iTunes/YouTube etc? Or is it something that will happen?

Or (and this is the cable guys’ favorite answer) is it something that people like to talk about, but won’t really do?

Today’s installment comes from JP Morgan’s Imran Khan, whose 2011 forecast is chock-full of interesting data (see these amazing Facebook numbers – and plan on getting at least one more of these today or tomorrow). Khan believes that cord-cutting – or at the very least, a wave of “over-the-top” video, delivered by the Web instead of cable – is real. “A consumer-driven Tsunami”, he calls it.

And this chart helps explain why, at least at first glance:

Ominously, Khan notes that the 28 percent of people who say they’d consider cutting the cord includes the rare 16 percent of people who don’t hate their cable company. In his words, they’re “currently satisfied with pay TV lineup & pricing”. (Who are these people? Have you met one of them? Do they have access to awesome mood-altering drugs?)

That seems terrifying for Comcast and Time Warner Cable. But bear in mind that these are people who say they’d consider cutting the cord. Which is a whole lot different than taking out the shears. I can think of lots of things I would consider, but I tend to do very few of them.

I’m also not sure that people who say they’d consider cutting the cord have really thought through what that means. The idea that you can drop cable and get all the video you want for a lot less sounds great, but it’s not true, at least for now: There’s a lot to watch on Hulu, Netflix, etc but it’s not a 1-1 replacement for cable.

Khan gets at this, a bit, when he notes that 63 percent of his survey’s possible cord-cutters would be up for it even if they’d lose access to live TV sports (ie, no Monday Night Football, etc).

That’s a lot, but that also means that Khan’s 28 percent figure is a little high — that’s the number of people who’d like to do something you can’t really do yet.

Still, worth noting that a different survey question does back up the fears that the cable guys have about Netflix and its Web streaming service — it’s a gateway drug to (possible) cord-cutting!

Tagged with: Comcast, cord cutting, digital, entertainment, Hulu, Imran Khan, Internet, iTunes, J. P. Morgan, MediaMemo, Netflix, Peter Kafka, television, Time Warner Cable, video, YouTube

comments so far. Add yours.

Anonymous

I have switched. The future is with Netflix, Apple, Amazon. The cable companies charge on average $100 per month with 50% of their programs being infomercials. This is absurd. Their days are numbered. Customers can pay $7.99 per month for unlimited streaming through Netflix with 150,000 titles and growing and… commercial free. You can get local channels on your own digital quality using newly developed antennas. Watch TV on demand cheap using streaming. Forget the Pay TV cable abd settelite companies.
http://www.twitter.com/stevenkane Steven Kane

Today’s issue of The Deal has a long piece arguing exactly the opposite — that cord cutting is a fiction, with little or no factual basis, but a chorus of digerati and technologists insisting that its real.

Me, I’d say its inevitable… but stilll a long long way off
Anonymous

Cut the cord six months ago. I use ShowRSS, uTorrent. Get all my shows (even broadcast) by download (typically with commercials removed) and all my movies. Watched at least half-dozen movies that are still in the theater over the holidays (Tron, True Grit, Somewhere, Black Swan).

Running everything through a VPN and run PeerBlock locally to keep the RIAA/MPAA off my tail.
dark_pools_of_soros

so you are a pirate – do you steal anything else or just like to rob a certain segment of the population?
Energy? Tuition? Health Care? all those are out of control pricing but you don’t steal that eh? Just rob the things you enjoy
Anonymous

Comparing illegal downloads to stealing electricity or healthcare? Really?

Those comparisons are so misguided and simple minded that they barely warrants a response and make you sound more like an MPAA shill than someone actually interested in an intelligent discussion.
http://pulse.yahoo.com/_IXZI6DX67EZUXHTJEFI2D6OGVQ MT

Actually internet piracy probably more negatively impacts us than stealing healthcare or electricity. Imagine if China, Russia, India, Europe, the rest of the third world had to pay us for all the software, movies, tv, games, music, sports, porno that they steal from us…I read there are more than 450 million internet users in China alone…it doesn’t take a forensic accountant to see that most of our trade deficit would be covered by the difference. They can download our product…we can’t download theirs
Anonymous

This is the untold story of “cutting the cord”. Paying for Netflix provides a fig leaf of respectability for most viewers. If you’re under 30, you grew up with the idea that music is free & you can pay for it if you desire convenience. The same thing is happening to TV. Broadcasters and MVPDs believe that live sports is the savior, but pirate streams over ubiquitous broadband (particularly wireless) & legal access via league services is putting paid to this defence.
http://pulse.yahoo.com/_IXZI6DX67EZUXHTJEFI2D6OGVQ MT

If the internet remains unregulated and unpoliced, all the tv revenue from NBA, NFL, MLB, NCAA, European premier soccer games, PPV fights and MMA bouts will all be severely impacted by lower ratings. The question is whether all the old politicians that have pandered to the masses by allowing people to steal from the music and film industry will allow their precious sports franchises to wither in the same way.
dark_pools_of_soros

Haggie – read what MT said.. you are part of the group that rather steal than support what you enjoy. How pathetic and short sighted are you? Parasites think the same way. My point was that even with the MPAA acting like a big oil company, you are still hurting the industry that supports actors and writers.

Hopefully you at least donate to their organizations if you do not want to support MPAA.
Anonymous

Considering via options are now in the low cost / free realm of course they will see traction for those looking to cut costs. The hard truth is you will give up some shows / live events. The model will also fall apart once free options go away. Hulu and others are now seeing prices hikes to meet the broadband needs and capacity is not growing fast enough (in scope and speed) to meet these demands.

So yeah you cut your cable / Sat bill of X .. cost Y for a bigger broadband pipe and streaming content goes up so it’s a wash and from what I’ve tried and used is no where close to a full 1080p/AC3 sound. It also doesn’t scale across a household well without having a media server or similar for different viewing habits.

The people that most value cord cutting are lower income, out of school / work college aged users. Joe America can barely use the internet and email.

Personally as noted the best method is still the pirate method. They have the best / fastest distribution. Adhere to strict quality controls and pretty much any media is available (and no I’m not saying torrents which is crap).

Open a Usenet / iirc account and consume all you want.

BTW current Comcast consumer and they provide good selection/quality signal and outstanding uptime. Even with all the scene releases I get (easily 50gb a week) I value their service both in cable tv and broadband.
Anonymous

Besides Netflix, I get all the local network channels through a digital converter box connected to analog tv.

I cut the cable last winter. First I downgraded to a basic Dish Network package for about $40/month that included Nickelodeon and … that’s about it. Then I discovered Netflix streaming. So I signed up to try it. I hooked up the computer to the projector and the first thing I watched was an old Sonny & Cher episode. Next was Fletch, then Lakeview Terrace, then The Office (the British one) and then …

I pulled the plug, cut the cord/cable or … whatever. They tried to stop me. They offered me a plan of only local channels. I said well, sorry, I get those for free, but thanks anyway.

And I didn’t watch Netflix through Xbox, PS3 or any internet-ready tv. I bought an s-video/video adapter to connect my computer to any tv (even analog tv). You set up a tv as another monitor (multiple display) and you have to have the capability to connect to another monitor. No you can’t browse or channel surf, but you find a movie or tv show at the computer and then you watch it. But then Netflix became available on the Wii system last spring. My son has a Wii but never uses it, sorry Nintendo. He has an Xbox too, but he’s always playing on that. Now we always use the Wii to watch Netflix and it’s plugged into an analog tv. That’s my favorite set-up. The Wii game controller is the perfect tv remote.

(Also the Wii is perfect for someone who doesn’t want a computer. With an internet
connection you can watch Netflix, browse and

It’s not even only about the cost of cable/satellite. There’s just never anything to watch, at least I don’t think there is. So I’m saying that the lower your income, the more apt you will be to keep your cable bill. Because when practically your only source of entertainment is tv … email right there through the Wii internet
channel … and don’t forget … play games.)

So now I … sometimes I can’t decide what to watch because there’s way too much to choose from … and all for just $8.99/month or $7.99 for streaming only.
you’re not going to give up your precious (or so they seem) cable/satellite tv channels.

Oh, one more thing, we’re not into sports, but any games that are broadcast on network tv – we get those.
Anonymous

This is a repost. For some reason my comment got all jumbled.

Besides Netflix, I get all the local network channels through a
digital converter box connected to analog tv.

I cut the cable last winter. First I downgraded to a basic Dish Network package for about $40/month that included Nickelodeon and … that’s about it. Then I discovered Netflix streaming. So I signed up to try it. I hooked up the computer to the projector and the first thing I watched was an old Sonny & Cher episode. Next was Fletch, then Lakeview Terrace, then The Office (the British one) and then …

I pulled the plug, cut the cord/cable or … whatever. They tried to stop me. They offered me a plan of only local channels. I said well, sorry, I get those for free, but thanks anyway.

And I didn’t watch Netflix through Xbox, PS3 or any internet-ready tv. I bought an s-video/video adapter to connect my computer to any tv (even analog tv). You set up a tv as another monitor (multiple display) and you have to have the capability to connect to another monitor. No you can’t browse or channel surf, but you find a movie or tv show at the computer and then you watch it. But then Netflix became available on the Wii system last spring. My son has a Wii but never uses it, sorry Nintendo. He has an Xbox too, but he’s always playing on that. Now we always use the Wii to watch Netflix and it’s plugged into an analog tv. That’s my favorite set-up. The Wii game controller is the perfect tv remote.

(Also the Wii is perfect for someone who doesn’t want a computer. With an internet connection you can watch Netflix, browse and email right there through the Wii internet channel … and don’t forget … play games.)

It’s not even only about the cost of cable/satellite. There’s just never anything to watch, at least I don’t think there is. So I’m saying that the lower your income, the more apt you will be to keep your cable bill. Because when practically your only source of entertainment is tv …you’re not going to give up your precious (or so they seem) cable/satellite tv channels.

So now I … sometimes I can’t decide what to watch because there’s way too much to choose from … and all for just $8.99/ month or $7.99 for streaming only.

Oh, one more thing, we’re not into sports, but any games that are broadcast on network tv – we get those.
Anonymous

I’m just worried the cable companies will decide, ‘hey, everyone who’s now ditching our TV packages for Internet streaming, we’ll just raise our prices on our Internet plans. You can’t win. I have Verizon FiOS, and I love it, but I wished they would allow more a la carte options. I hope that if Internet streaming increases, the cable companies will realize that they will have to compete by breaking up their tiered packages so people can pick and choose more towards their tastes. I don’t mind paying for cable, but let me subscribe to channels I want to watch. Consumers tried to do this a couple of years ago, and it went all they up to the Supreme Court if you remember, and they ruled that “Sorry, the Cable Companies are not obligated to break up their packages to their customers”.
Anonymous

I’m just worried the cable companies will decide, ‘hey, everyone who’s now ditching our TV packages for Internet streaming, we’ll just raise our prices on our Internet plans. You can’t win. I have Verizon FiOS, and I love it, but I wished they would allow more a la carte options. I hope that if Internet streaming increases, the cable companies will realize that they will have to compete by breaking up their tiered packages so people can pick and choose more towards their tastes. I don’t mind paying for cable, but let me subscribe to channels I want to watch. Consumers tried to do this a couple of years ago, and it went all they up to the Supreme Court if you remember, and they ruled that “Sorry, the Cable Companies are not obligated to break up their packages to their customers”.
Anonymous

One word… Roku.

When I moved into my new house I studied my options. Setting up cable or satelite with a DVR and HD receiver would have cost me at least $80 per month (up to $120!). Even at the lower cost that comes out to $960 per year.

Instead I bought a roku player, signed up for Netflix, Hulu Plus, and NFL Gamerewind.

Roku = $80 one time
Netflix and Hulu = $16 per month
NFL = $50 per season ($15 for playoffs)

Grand total= $337
Savings of $623 this year.

There are some shows I like that I don’t get (Mad Men, Walking Dead) but I can buy them through Amazon video for $2 per show. So lets say there’s even 5 shows I must have every episode of. ($2 x 20 episodes per season = $40 per show x 5 shows means total =$200)

Still Saving $400+ a year. No commercials. Watch On-Demand. HD quality.

Cable companies should be scared
Anonymous

No but I am using the TV less and less due to Netflix, Hulu, and internet content

With TV prices increasing, I just may do it in several more years as MORE content goes online
Anonymous

Do you steal your broadband connection? I assume you use some form of broadband which most run $40 a month of a good speed U/D. So add $480 back into your total. So it’s a wash when all is said and done. Your costs are just spread.

This assume broadband costs stay the same or lower which they most certainly will not.
Anonymous

I switched years ago already, why do I need to make Comcast & Time Warner more $?
Anonymous

I would be paying for the broadband even If I had cable. I have to work from home a lot, which requires internet access.

So the cost of cable would be in addition to my broadband cost. Therefore, not a wash, as no matter where broadband costs go, I will need it in spite of my TV.

Most people paying for cable already have broadband and are needlessly paying for both.
http://pattayagirls.blog.com/ Pattaya Girls

i’ll be keeping my cable tv, i never have enough bandwidth due to my online gaming no way i could stream tv at the same time.
Anonymous

There is more than just rumblings amongst consumers and it’s not just about current economic conditions, as cable/satellite providers have commented. It is intriguing to read the comments to this article as to what consumers have achieved in alternate consumption efforts.

The more proactive and creative the cable/satellite distributors are in being value-price sensitive, the more competitive they’ll be. Reducing mandates in purchasing of fringe programming, and by providing some degree of better consumer choice in programming purchased, will make cable/satellite programming a more economical and assured purchase decision.

David Polakoff
See more on “Cut the Cake…I Mean Cord” and “The Winter of Our Content Distribution Discontent.”
http://davidpolakoff.wordpress.com
http://www.facebook.com/AllenKlosowski Allen Klosowski

I already did. Two years ago. Netflix, OTA, and Amazon VOD. Now I’m adding Hulu to the mix.

Are One in Four of You Really Going to Cut Cable and Switch to Web Video?

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