PLANO, TEXAS—The threat of cord cutting has been a cloud over pay-TV providers for a while now, but according to a recent report by The Diffusion Group, the last two years have been a potential turning point. In the report “Life Without Legacy Pay-TV: A Profile of U.S. Cord Cutters and Cord Nevers,” TDG finds that 52 percent of cord-cutters cancelled their legacy pay-TV service either in 2015 or 2016, with a third of those coming in 2016 alone. TDG points out a number of factors and threats that contributed to this trend and why it might continue to grow.
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One of the key elements is the popularization of on-demand streaming services like Netflix and Amazon Prime. This has led to legacy subscribers reassessing what they are paying for traditional TV services. “The calculus of today’s TV subscribers has been radically altered by the presence of SVOD services like Netflix,” said Michael Greeson, co-founder and principal at TDG.
Streaming has also become more than just a source for on-demand content, as it now offers a variety of live linear services that can be customized to the needs of the individuals viewing segments. “Whether from independents (Sony Vue, YouTube TV, Hulu) or from incumbents (DirecTV Now, Dish’s Sling TV), consumers now have greater flexibility in deciding for which channels they receive and pay,” reported Greeson.
TDG also points out that many incumbents are making the move to skinny bundle offerings—providing customers with lower prices and a customized, reduced number of total channels—but that it may in fact not be in their best long-term interest. “TDG observed long ago that incumbents were going to have to make a choice: either resign themselves to being a ‘dumb-pipe’ provider, or invest in using IP, change the TV experience, and become the go-to source for all things video,” Greeson explained.
One example Greeson gave of a company that had done well in this regard was Comcast. “Comcast turned into the latter, investing in the hardware and software required to bring the power of IP to the legacy TV experience. The company is now gaining video subscribers when others are reporting loses.”
The full “Life Without Legacy Pay-TV” report is now available.