Cord cutters flocking to online TV at the expense of cable
A couple of years ago TV lovers had only one choice. To watch quality TV they needed cable or they didnt get to watch any. But now, after obediently paying the subscriptions and swallowing the annual rate increases. The public are fighting back and watching Online TV instead.
Many are cancelling or even just downgrading the subscription to a basic level and watching the top quality premium stuff online and saving around $50 per month.
Because more TV is appearing on the internet and via set top boxes the urge to cut and run is gaining momentum.
During the last couple of years, online TV services have grown at an amazing rate with websites like Hulu, Fancast, Joost, Sling and YouTube at the forefront supplying free TV streams from the TV networks and cable companies like NBC, CBS and Fox. You can watch pretty much everything from CSI, 24 and 30 Rock and anything else that tickles your fancy.
Research has shown that younger adults are the most biggest users of online tv, but even that changes as the oldies figure out how simple watching online TV can be.
Although cable does not face any immediate threat from these ‘cord cutters’, a term used for viewers who cancel or downgrade pay TV services and move to online TV. Cable and satellite companies are beginning to sit up and take notice in the growth of free online TV content. Time Warners chief exec,Glenn Britt has expressed concern during last months quarterly earnings discussion with analysts. TW Cable the second biggest US cable company, said it has lost 119,000 basic video subscribers during the last quarter 2008.
“We are starting to see the beginning of cord cutting,” Britt said. “People will choose not to buy subscription video if they can get the same stuff for free.”
Whilst firm figures are not available, the size of cord cutters is remaining pretty small, says Kurt Scherf, vice president at Parks Associates, a market research firm from Dallas. Some estimates claim it is just one percent of the existing television audience.
That is still partly down to the negatives of online TV. Viewing video on PC still is not quite as pleasurable as watching on the big TV and sitting on the couch. Plus the quality of online TV, whilst improving all the time, still needs some work.
However cable TV is not recession proof, and viewers feeling the pinch are cutting back on subscriptions.
And while everything coming from cable is pretty much available online for free, it is harder to justify the extra expense every month. Using websites like Hulu to watch prime time TV means it is not a great sacrifice as it once was.
Hulu, the joint venture between NBC and Fox that just celebrated its first birthday is the most popular aggregators of catch up TV shows and movies, showing 13.1 billion videos in February, according to comScore, an internet research company.
Hulu is already feeling pressurised by the content providers about its potential to disrupt their profits and recently blocked access to Boxee, a free service allowing users to stream online TV straight to their TV’s.
“I think new content aggregators like Hulu can step up and start to be very challenging to the cable operators’ longevity,” so says Susan Brazer, md of LionShare Strategies, a media research firm. “There might be opportunities for the individual networks to have an alternative distribution method other than the cable operators.”
It is also a fine line for the cable networks, who want to capitalize on the internet TV boom but also want to protect their assets, which rely on massive fees paid by the cable operators.
“Online video is a terrific way for our consumers to sample shows,” said Colleen Fahey Rush, executive vice president of research at MTV Networks. “Operators and content providers need to work together to figure it out.”
A raft of new developments are making TV that is able to access online TV easy. Netflix subscribers are able to buy a $99 settop box from Roku that streams movies straight to TV.
Vudu is selling a $299 settop box, allowing viewers to download TV shows for $1.99 per episode and movies for anywhere from 99 cents to $19.99. These new devices will make cutting the cord even easier for consumers.
Comcast, the biggest Cable TV provider in the US, says it isnt convinced that a large percentage of viewers are ready to cut the cord. But the company is still aggressively jumping onto the online TV bandwagon by offering free TV shows and movies via Fancast, which is a direct competitor to the Hulu website.
“We want to be wherever our consumers are,” spokeswoman Kate Noel said. “And we certainly saw a movement of customers who were interested in getting content both on their televisions and in an online capacity.”
But Bobby Tulsiani, senior analyst at Forrester Research in Cambridge, Mass., said pay TV providers and cable programmers need to do more to prepare for the growth of on-line video.
“Just because you know it’s coming, that doesn’t meant that you can get it right,” he said. “The intent is there now, but the execution remains to be seen.”
Also users still need fast internet broadband connections to stream online TV, this may be profitable for the broadband businesses at cable and telecommunications companies. AT&T.
“The key here is not television. It’s broadband,” said spokesman Mark Siegel. “If they’re choosing to watch TV on their PC, we have the ability to let them do that through broadband access.”
Brazer, a former senior vice president at Viacom, noted that consumers want to watch more and more video-on-demand, which she added was the driving force behind the online TV growth.
“Having access to what we want to watch, when we want to watch it is the nirvana that we’re all looking for,” she said. “And it may take some time to get to that point.”
And maybe not that long either. On a quick browse i could find pretty much anything i wanted to watch at a time i wanted to watch. Any TV show or movie is online right now.
Related News:
- Cable TV online
- Warner Cable wants to give free TV content online
- Is it time to dump cable and satellite – watch TV online?
- Cable companies muscle in on internet TV
- Internet TV killing Cable
The VUDU Box is now $149.
[...] in some circles, there is a perception of large numbers of consumers fleeing cable (e.g., “Cord cutters flocking to online TV at the expense of cable“), but the reality is quite [...]
[...] price drops, and b) they have the money making cable distributors who are already under threat with cord cutters jumping across to online video downloads from Apple and Amazon amongst [...]
[...] is a big debate going on about the effects of internet tv on cable subscribers, that it will kill cable and lead us all into a free utopia. We are also told that traditional TV [...]
[...] is a luxury they cannot live without. Although internet tv is a viable alternative, the reports of cord cutters moving to online tv may have been a little [...]
[...] Consulting Group from Toronto have revealed in a new study that in 2009 – 800,000 viewers dumped cable television and moved to watching tv online. Cord cutters heading [...]
[...] though we have been hearing the same story about cord cutters leaving cable for months now, technology is converging on the tv landscape to make this more likely to happen. [...]
[...] available through the Google TV platform. Already many disgruntled cable viewers are thinking about cutting back their pay TV subscriptions, which could have cable companies wetting their expensive subscription paid for [...]
[...] cutting has always been a contencious issue, on the one hand it will be the death of cable tv, on the other it does’nt exist. However, a new report by Frank N Magid & Associates shows [...]
[...] am i not cutting the cord”. In previous years there have been trailblazers and pockets of cord cutting, but the previous lack of choice, variety and the fact it is new and seemingly complex kept the [...]
[...] big screen tv, my cable and satellite content and Blu-Ray player when im at home. So why have i not cut the cord and gone totally over to the online tv side when i keep promoting it? Its coming but not just [...]