Peter Kafka

Recent Posts by Peter Kafka

Inside the Mysterious World of the Elusive Cord-Cutter!

poltergeistCord-cutting may be overstated, but it is real. What’s more worrisome for the pay-TV industry are the cord-nevers: Twentysomethings who have never paid for TV subscriptions, because they’ve always been been able to get what they want over the Web.

But what are they watching, and how are they getting it on their screens? Bernstein Research is asking a bunch of them, via focus groups.

Here’s a top-line breakdown of two New York City panels Bernstein conducted this week. bernstein cord-cutters

Notice that there are a bunch of commonalities connecting the 15 panelists Bernstein talked to:

  • Lots of them are paying for content, primarily via Netflix, along with Hulu+, Amazon and iTunes.
  • Lots of them are stealing content, but few are doing it via pirate sites and the like. Instead, they are “sharing” other people’s paid subscriptions to Netflix and HBO Go.
  • Only one is using Aereo. Bernstein says that most of its panelists had never heard of the broadcast-TV-over-the Web service — and that few realized they could get broadcast TV, legally and free, with an antenna.
  • All of them are still connected to the Pay TV Industrial Complex, because all of them are paying for broadband. So, even if Time Warner, Verizon, Comcast and Cablevision never end up converting these folks to pay TV customers, they’re still going to have them as customers (and remember that selling broadband is a much higher-margin business than selling TV).

The other commonality here is that all but one of these folks are under 30. And Bernstein says that when they talk about getting older, they also imagine that they’ll end up subscribing to TV again, just like their parents did.

That’s the narrative that lets the pay TV executives sleep at night, and we won’t see if it plays out for a few more years.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik