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(R)editorial: To Cut or Not to Cut

In an industry already saturated with more than its share of buzzwords, “cord-cutting” has quickly risen to prominence in recent months. We’ve run several stories in the last few weeks here on Inside Redbox discussing this phenomenon, and thought it might be interesting to discuss cord-cutting in a bit more detail.

What is cord-cutting?
Simply put, cord-cutting is a choice made by consumers to disconnect themselves from cable and other pay-TV providers in favor of other alternatives. This is upsetting decades of tradition in which a large percentage of consumers pay a monthly fee for a bundle of channels, often with telephone service and internet thrown in as well.

It should be noted, however, that according to some in the industry, cord-cutting isn’t troubling or doesn’t even exist. During his company’s recent Q3 conference call with analysts, Time Warner CEO Jeff Bewkes was asked about the potential damage cord-cutting could do to Warner-owned HBO and Turner. Bewkes’ response:

“On the cord-cutting, we’re not seeing it — we doubt that we’re going to see it . . . although we’ll all watch for it. If you look at TV viewing across all the different networks, it’s a very healthy picture, ratings, programming quality, the strength of these brands.”

Verizon CEO Ivan Seidenberg, on the other hand, has acknowledged that the phenomenon not only exists, but also stated that future consumers are not likely to tolerate the costly service bundles being pitched to them by providers. Said Seidenberg:

“Young people are pretty smart. They’re not going to pay for something they don’t need to,”

Who is cutting the cord?
A fair few consumers, it would seem. NewTeeVee recently reported that subscriber losses for four of the top five cable providers totaled more than 500,000 in the last quarter alone.  And, in a new development, many of these lost subscribers are not necessarily signing up for alternatives such as satellite or IPTV. They are, in effect, cutting the cord to paid TV in all its guises.

Why are they doing it?
Cost and choice, in a nutshell. In its most recent earnings report, Comcast divulged an average revenue per user of around $130 per month. Other major cable providers come in at similar numbers. 130 bucks would pay for a lot of Netflix subscriptions, Redbox rentals and Hulu Plus sign-ups, let alone all of the free, ad-supported content that can be found online.

As for choice, remember the 90′s? Record labels and music retailers grew bloated and complacent by charging customers $18.99 for a CD with two or three tracks that were actually worth owning. Then along came (illegal) options such as Napster and Kazaa and (legal) ones such as iTunes that allowed consumers to break free of label-induced tyranny and only get the songs that they actually wanted. The labels freaked out, failed to adapt, and are now paying the price for their greed and reluctance to evolve along with consumer preferences.

The same thing is happening with pay-TV. Consumers are tired of writing a huge check every month for a massive, set-in-stone bundle of channels, only a few of which usually offer appealing content. Just like the rise of LimeWire and iTunes in the music industry, options such as Redbox, Netflix, Roku, Hulu, etc. have popped up to offer consumers (less costly) alternatives to the traditional pay-TV monolith. And most terrifying for traditional service providers is the fact that once the cord has been cut, many are finding that they don’t miss it.

So now what?
By all appearances, cord-cutting is here to stay and will continue to gain momentum with consumers. As media becomes more fragmented and niche-oriented, the traditional pay-TV model will increasingly come to be seen as a curious relic of another age, just like that $19 Ace of Base CD you bought at Sam Goody in eighth grade.

Your turn, Insiders. Is a cutting of the cord in your past or future? What do you think will happen to the pay-TV industry over the next few years? Is cutting the cord worth the relative inconveniences of delayed viewing and content gaps? Leave your rants, insights and predictions in the comments.

30 Responses to “(R)editorial: To Cut or Not to Cut”

  1. Visitor [Join Now]
    Big Bob [visitor]

    My biggest hitch is getting live sporting events in HD. Until I can see a good alternative, I won’t be cutting the cord.

  2. Member [Join Now]
    starman15317

    I’ve actually never had the cable plugged in! It is especially useless now. The only reason I would consider it is for sports (which I don’t care THAT much about) and to watch Conan, but that will be available to watch on teamcoco.com.

    No cable sounds good to me!

  3. Member [Join Now]
    alans613

    I haven’t had cable since October, 2006 and I don’t miss it. I rely on Redbox, BB Express, Netflix, BB By Mail and occasionally Family Video…and even if I count my BB By Mail and Netflix memberships, plus rented one movie each from RB and BBE AND rented a DVD from FV, it would total right around $26. That’s a $104 savings over the average $130-a-month cable/satelitte bill. The cord cutting will continue, and the TV/Sat industry will eventually become the “Big Babies” that the music industry and most recently Time Warner, Universal, and Fox have become to $1 DVD rentals.

  4. Visitor [Join Now]
    Farva [visitor]

    I finally cut the cord in June of this year and am glad I did. My only complaint is I should have done it sooner.

  5. Visitor [Join Now]
    me again [visitor]

    i need espn

    • Visitor [Join Now]
      That Guy [visitor]

      Got an XBOX 360? Basically, it has the ESPN3.com app now. So far, only thing I haven’t been able watch is Monday Night Football on it, but that’s an NFL issue not an ESPN issue.

  6. Visitor [Join Now]
    Brad [visitor]

    The giants are fooling themselves if they think this trend isn’t going to increase exponentially. I would be glad to dump Dish and save almost $100/month, if I could easily find all the shows and sports I watch all on one website — or at least reliable links to all of those on said website.

  7. Visitor [Join Now]
    Jo Anne [visitor]

    I haven’t had cable since 2005 and haven’t missed it. I recently got high speed cable internet and find that between Hulu, Youtube, Netflix and of course Redbox, I have plenty of great viewing. Thanks to VCRs I’m used to not watching something at its original broadcast time and day.

    I find I don’t buy DVDs or CDs any more since I rarely watch the same thing twice.

  8. Visitor [Join Now]
    Charity [visitor]

    About 400,000+ people have been filing for unemployment a week. Of course, people are cutting paid services!

  9. Visitor [Join Now]
    sherchap [visitor]

    I wish I could cut the cable cord, but it is mandatory at my apartment complex yet they add $25 to the rent for it. So, instead I cut the high speed internet cord saving myself $43 per month. I don’t miss it like I thought I would–when i need the internet I just use my iphone. But still I’d rather cut the cable cord.

  10. Visitor [Join Now]
    CHRIS [visitor]

    We havent had Direct TV since 2005 and cable is not available in our area… not yet. We have enough shows to keep up with on the regular networks and besides we don’t watch a lot of TV. We use redbox and family video and netflix for our movies so much cheaper than making a Direct TV payment every month and IF we purchase a dvd it’s either at a vendors mall or a yard sale and never pay over $5 for one.

  11. Visitor [Join Now]
    Frank Huber [visitor]

    Local sports in HD, plus an addiction to OTA & cable series in HD, keep me plugged into DirecTV — as if I were connected to the Matrix. Their DVR is a mix of very good and very bad, but HD TiVo is coming in early 2011! At last.

  12. Visitor [Join Now]
    karen [visitor]

    CUT HHE CORD IN SEPTEMEBER!!
    DON’T MISS IT; WE USE REDBOX AND SOME OTHER INTERNET SITES TO CATCH UP. IT’S GREAT NOT HAVING THAT HUGE CABLE BILL.

  13. Visitor [Join Now]
    Angie [visitor]

    Cut the cord in June due to job loss and no money. I don’t miss it that much, it’s not worth the money. Cut my phone as well went with magicjack and cell phone.

  14. Visitor [Join Now]
    Wintermute [visitor]

    I’m shopping for the hardware to do this in every room I have TV. Got tired of the $130+ bill and subsidizing the addiction of neanderthals and dummies to ritualized tribal warfare: i.e., spectator sports, mainly ball games, us vs. them.

  15. Visitor [Join Now]
    That Guy [visitor]

    Here is my ideal set up – Hi Def TV, 3D Blu-Ray player/PS3, XBOX 360, Redbox (for Blu-Ray movies), Netflix (for streaming on XBOX 360 and Blu-Ray movies), Hulu (for streaming), Blockbuster (for up to date Blu-Ray movies for rent), Amazon (I want to build a decent Blu-Ray movie collection and I have Amazon Prime so why not), Zune Marketplace (for when I just need that movie in high definition and it isn’t available at said previous options), Gamefly (for games I do not want to buy right away or to buy games at a cheaper price), DirecTV (access charge+NFL Sunday Ticket+random >$20 package just to build credit and pay a small bill every month). This gets all of my sports, movies, anime, and video games at a much smaller overall cost while still building my credit paying a small overall monthly bill. Up front cost may be a bit, but, a few of these CAN BE subtracted for a still great overall home entertainment experience!

  16. Visitor [Join Now]
    Sewunicorn [visitor]

    I cut the cable cord in 2005. I watch a small number of current TV shows through Hulu, and a much larger amount of older shows and movies of varying ages through Netflix and my at-home library. At times I mourn the inability to watch certain live sports programming, particularly hockey, but not enough to reconnect the cord. And I was recently given a smaler HDTV for my birthday and no longer need rabbit ears to pick up local channels, so I actually have access to more programming than I use.

    I have actually looked into reconnecting. Not because I plan to do so, but more to reconfirm to myself that I did the right thing. The only way I can get every channel I would honestly watch is to sign up for UVerse through AT&T and get the 300-channel package at $82 a month plus taxes and fees…. for 8 channels. That’s $10 a month per channel that would actually interest me?! I don’t THINK so!!!

    If the cable/sat/UVerse type providers would come out with an a la carte menu that would let me pick just the channels I actually want to watch, and pay an appropriate subscription for each channel, I might consider it. It would depend largely on what they would charge for each channel and if all of my desired channels were actually available.

  17. Visitor [Join Now]
    Don [visitor]

    I just cut got rid of dish. I was tiered of paying for content I never watched. Until I can put together my own package I’m not going to reconnect. As far as sports goes, I get enough over air, and if I really want to a game on TV it is always fun to go to a local place that is showing the game(s).

    Now it’s all, Hulu, Netflix, AppleTV, Redbox and a huge savings…as long as they all have programs in HD there will be no turning back

  18. Visitor [Join Now]
    George [visitor]

    At my house we already cut the cord early this year. We use Netflix exclusively now and really don’t miss cable or Satellite TV (we’ve had both in the past).

    I am considering the new Hulu Plus offer to get current year TV series that we like, but I am prepared to wait a year and get the same series (a year later) from my Netflix plan that I am already paying for. I probably will NOT use Hulu Plus because they charge you $9.99 a month and still make you watch commercials. I will probably just continue to pay $8.99 to Netflix and get all that I care to see even though TV series come a year later to Netflix. I can wait!

    IMHO others should consider doing the same and send a message to the providers of high cost cable where we pay for channels we have no interest in watching.

  19. Visitor [Join Now]
    Kim [visitor]

    We cut the cord in September…hubby had saved up and bought a PS3; we purchased an $80 lifetime subscr with Playon.com which streams Hulu, major networks (local and cable) and all the things my kids loved “On Demand” as well as ESPN3…which my hubby is a MAJOR sports nut, and he hasn’t been missing a thing. Then we also do Redbox of course as well as Netflix…I would not say we are suffering at all.

  20. Visitor [Join Now]
    Golfnut [visitor]

    About to cut the cord. Discovered Playon.tv in the spring and have been preparing my inhome system for when my “introductory rate” at Comcast ends in Dec and my cable bill goes up by $60/month. Put a WD TV Live on each TV and Playon server on my computer. Can stream nearly any TV show to any TV now. Will use over the air broadcasts for live TV and Playon for internet streaming. Only cons, no History, Discovery, Disney (for the kids) channels or live sports. Those are not worth $60/month though as I am sure I can find other suitable entertainment through Playon.

  21. Visitor [Join Now]
    Movie Buffer [visitor]

    I have never had cable. I have this thing on top of my roof called an antennae. I don’t even have time to watch the channels I get, and I have a full load Sunday through Friday to watch. All for FREE! No satellite or cable company can beat that deal. And if something preempts my normal program, I just pop in one of my many DVDs to watch. So just how much is $0 a month times 17 years? Nothing.

  22. Visitor [Join Now]
    Nathan Smith [visitor]

    I too have cut the cable, but I’m surprised almost no one has mentioned getting an HD antennae for FREE local High Definition TV :) I love The Office, and yes, I can watch it the day after on NBC.com, but having it live, plus getting the local news, sports, even the Olympics in full high definition with NO monthly fee is wonderful. My neighbor and I share a wireless router, and he gives me his Netflix login, and we can BOTH stream Netflix movies at the same time. I use Redbox for movies, since my neighbor gets the mail in disks, that gets me the latest movies. By the way, DVDONME and BREAKROOM codes can be used once per credit card, so we’ve enjoyed a good 20 free movies on Redbox, plus the monthly free code by text from Redbox. I also have the original Apple TV, plus an iPhone 4, so I can even stream Netflix in bed. I hook my MacBook Pro to my 50″ Plasma, so any internet TV or Netflix is full screen. My total bill for everything is usually under $10 a month (besides internet). That I split for only $17 a month.

  23. Member [Join Now]

    I too have cut the cable, but I’m surprised almost no one has mentioned getting an HD antennae for FREE local High Definition TV :) I love The Office, and yes, I can watch it the day after on NBC.com, but having it live, plus getting the local news, sports, even the Olympics in full high definition with NO monthly fee is wonderful. My neighbor and I share a wireless router, and he gives me his Netflix login, and we can BOTH stream Netflix movies at the same time. I use Redbox for movies, since my neighbor gets the mail in disks, that gets me the latest movies. By the way, DVDONME and BREAKROOM codes can be used once per credit card, so we’ve enjoyed a good 20 free movies on Redbox, plus the monthly free code by text from Redbox. I also have the original Apple TV, plus an iPhone 4, so I can even stream Netflix in bed. I hook my MacBook Pro to my 50? Plasma, so any internet TV or Netflix is full screen. My total bill for everything is usually under $10 a month (besides internet). That I split for only $17 a month.

  24. Visitor [Join Now]
    Mark [visitor]

    I haven’t had cable since 2001. That includes 2 homes and my current apartment. I’m not even sure where the cable outlet is here.

    My HDTV knows only a simple indoor antenna feed and my television is programmed to receive just the big 4 networks. Unless there’s a tornado in the area, the TV input only gets used in the Spring for NASCAR. Otherwise, it stays on the BD/DVD input.

    Do I miss cable television? That’s like saying I miss my ex-wife.

  25. Visitor [Join Now]
    That Guy [visitor]

    Reasons why Pops won’t cute the cable: Soccer and old Spanish movies. Basically, ESPN/FOX Deportes, GOLTV, CineLatino family of channels, FOX Soccer Channel, and a few more than I cannot remember right now.

  26. Visitor [Join Now]
    Darrell [visitor]

    I cut the cord long ago. I now have a Netflix account and am able to receive FOX, NBC & OPB off air in HD. FOX & NBC give me more football than I care to watch in a weekend and the streaming quality with Netflix is comparable to a DVD. Since I am disabled, I watch a lot of TV now and I don’t miss cable or satellite at all. I have a Blu-Ray account with Netflix and rent Blu-Ray from Redbox. I am quite content. Any network show I can watch on the affiliate website or Hulu. Comcast is my only option in the apartment I live in and they want to rape me $30/month for basic cable. Sorry Charlie, I’m not biting. I hope the industry wakes up soon and will offer a la carte programming so people can purchase channels they actually wish to watch.

  27. Visitor [Join Now]
    UBM [visitor]

    Keep cutting the cord. They’ll get the hint.
    I got a survey from Cox the other day, and they asked for reasons
    why I chose to drop Digital Cable; on the multiple choice
    survey I chose ” Other” and typed “Tier selections should not be tiers but
    a la carte channel choices.”.

    Eventually they’ll learn that people don’t want to pay $30 a tier just
    to get one channel out 8 that doesn’t suck.

    I pay for internet, and through it I get my TV. I watch what I want to watch
    when I want to watch it, and I’m happy for that. Movies come from
    a huge collection of bought from Store Closings of Blockbuster,
    Movie Gallery, and Hollywood Video, so I’ve got tons of stuff to watch,
    the same as if I was subscribed to Cable tiers that just replay old movies
    over and over again!

    The 28 day wait hasn’t affected me, because when it does show up in
    Redbox, I’m ready to watch it. Movies aren’t like groceries: you might
    die if you don’t have something to eat this Coming Tuesday,
    but you won’t die if don’t get a movie on this coming New Release Tuesday.
    Consumers have figured this out, & soon, the studios will too.
    The music industry thought the same, until people stopped
    lining up to buy music every Tuesday. Same with Comic Book Stores, same
    with Baseball Card stores. Every venue of entertainment that lived and died
    by the “New Release Day” theory has gotten their comeuppance.

    Movie studios are just to slow to learn that fact.