Some cord cutting services slowing down some?

It is natural to expect some slowing in the growth of the CoIP (Cable over IP) services. I believe that they had insane growth numbers for the past 2-3 years because of two primary markets, one being people who had already cut the cord, wanted some live TV, but didn't want to pay for a full cable package, and secondly, pent up demand of people who had a cable package, but didn't want to get rid of cable channels entirely. Now that most of that pent up demand has been flushed out of the market, the growth will be slow but steady. I believe that in the long run, CoIP services will recapture somewhere around 50% of cord cutters (maybe 60%, maybe 40%) but fewer cord nevers. These statistics are going to combine with the facts that people who do subscribe to CoIP can be very fickle, and can add and drop their subscription whenever they want, and that CoIP packages aren't usually nearly as bloated as cable packages (although DTVN is close). Cord cutting is not going to stop, there just isn't a pent up demand for CoIP anymore, so it will be a steady movement of people from pay tv over to CoIP and true cord cutting.

I think YTTV is poised for huge growth, as they have the best targeted lineup of any of the services, they have launched in many markets, and they have gone to almost entirely 60p streaming, which was a stumbling block at first. If you look at their lineup, here in CT I can watch basketball, baseball, news, and Olympics, i.e. everything I would need pay tv for, but for $40/mo with no contract and integration with YouTube and Google, which I already use. That's a really compelling package. They cut most of the junk, crap, and downright garbage out of the lineup (other than the Disney garbage that was forced on them to get ESPN), and yet retained all of the necessary sports, news, and NBC Olympics channels with a few bonuses like BBC World News that don't always show up on every service.

Thirdly, the competition is fierce. The market can't support a ton of these big services. I'm not sure which ones will survive and which ones won't, but PS Vue is in bad shape. Sony bungled the branding of it, and dumb people think they need a Playstation, although AT&T overcame that with extensive advertising of DTVN for dumb people who think that DTVN requires a satellite dish. Further, Sony doesn't have a lot of negotiating power like Sling (DISH), DTVN (DirecTV and U-Verse), and others do. Google is largely an outsider, as Google Fiber TV is tiny, but they have come in very strong with YTTV, so they may have a real shot. Sling might be in trouble, even though they were first to market. I have a hard time being objective with them, as they are missing a lot of our sports channels due to DISH not carrying them. I do know, however, that they are strong in the international market, and I know that people are cord stacking to get international channels through Sling.

I predict that cord cutting is going to continue at roughly 3M/year dropping service. The numbers are actually even worse than they appear, as there are something like 750k new housing starts a year, 250k houses are taken out of the housing stock (demolished, redeveloped, whatever), so whatever number comes out of yearly cord cutting losses, it's really about .3-.4M higher than the numbers when you account for new housing. Looking at the rates, and the very low rates of re-connection when people move, along with competition from streaming services that aim to replace the cord, I predict that by 2030 the market for MVPDs will have shrunk at least in half, from roughly 88M in 2017 to somewhere in the range of 20-40M in 2030, with CoIP recapturing a total of 25-40% of those losses, or roughly 10-24M subs when you factor in a 50% recapture rate of cord cutters combined with cord nevers entering the market.

 

That's a tricky problem, both because of MSO partners and because of the costs of actually developing those apps. I think we're going to start seeing seasonal fluctuations with potentially millions of subscribers adding these services for a sports season, then dropping them. Basketball/hockey and baseball sort of net each other out, so the swings might not be that huge, but we're going to have another epic supercycle for pay tv come 2020 with Tokyo and the Election, which could generate huge gains and then losses for these no-contract services.

Competition has really put the consumer in control!

 

Advertisements

Lol.

 

Elaborate?

 

I can see a form of contract for streaming services, sign up for a year and get a price break. Money talks, and is louder then other options.

 

A friend just moved from Massachusetts to New Hampshire. In Mass, he had Comcast throughout. There was an antenna on the roof of the new house, he gets 68 channels OTA, and has a Comcast box in the living room plus high speed internet. While he was working on the antenna, a neighbor stopped by. The neighbor had an antenna and only got three channels. We fixed that. OTA and OTT have a much bigger impact than subscriber count. Competition impacts price and service offerings as well.

 

Depending on where you live, it is sometimes cheaper to purchase a “Bundle” package from your cable provider than purchasing all separate services. Here in Rhode Island we are lucky to have Cox and Verizon Fios fighting for our business and both offer great pricing. Competition is great.... unfortunately that’s not the case in many areas.

 

Be careful what you ask for!

 

So true! Say I, living where competition is non-existent. There is no way I can cut cable TV and save money while still getting the channels I want.

I suspect the providers are actually gouging me so they can lose money competing in other areas.

 

Cox offering great pricing? Their website shows horrendous pricing in RI. Are they offering cheaper prices that actually bother to compete with FiOS through some other mechanism? What about caps? That's a Cox-killer in Rhode Island when FiOS is in many places and has a 10TB soft cap.

It's literally impossible to tell what smark was referring to.

 

I can tell you first hand that they actively compete with one another including giving gift cards to buy out your remaining contract from Fios so you can switch over. Not sure what is on their website, but they even have reps going door to door offering package deals. Also, when your contract is up, and if you are willing to fight a little, they are happy to negotiate a new deal so you won't jump ship. There are also mailings weekly from both providers with the latest specials!! As a consumer that is a nice position to be in. I am with Verizon right now so I can't speak to their caps but when I was with Cox a few years ago I really never had any issue and I was streaming Netflix, etc.... although I must say my children are married, so it is just my wife and I that use the internet.

 

I think an overlooked reason for the apparent slowdown in cord cutting is that OTT services require the customer to be much more tech savvy and tolerant of issues. And there are a limited number of people like that. Grandma can turn on cable and watch any channel without a second thought. But if confronted with an OTT service, like DirecTV NOW for example, Grandma has to switch to her Roku, pray that her wifi and internet connections are good and fast enough, launch the app, log in to the app, use a bare bones remote with no numbers to load and navigate a painfully slow guide, wait for the channel to buffer, recover from app crashes, deal with limited streams and DVR space, launch and log into individual apps for on demand, etc. It takes a lot of effort and a good understanding of how all the different parts work and are related to each other. The additional pain of OTT is a hard sell and probably results in a lot of trial users never switching over.

This is also a barrier to Tivo itself. Just think of all the pain most of us have to endure to pair a cable card and tuning adapter. Most people aren't going to tolerate that.

I'm willing to deal with all of that inconvenience and complexity in order to save some money. But I imagine most people would rather pay more to have a simple, effortless system.

 

I wish more would.

 

Some of us enjoy it!

 

Very true!!

 

That's interesting. They must be doing one thing on their website, and another in person or by mail. Proof that competition works!

I believe they still have the 1TB cap, which isn't a problem for most people most of the time, but if you go to do a huge backup or download a bunch of games or something, then you can burn through that pretty quickly.

I think you have a point here, but it's not that cord cutting is harder. Cord-cutting is actually easier in the end, but it takes a mentality shift about how you find and consume television content. The new model is that you know what you want to watch, you actively seek it out, or you browse through content, not linear channels. Some people, like Grandma, are stuck in their old ways, and unable to comprehend the concept of seeking out content over channels or networks, and as a result, they stick to traditional linear pay TV.

Once that change in mentality takes place, cord cutting makes things easier, not harder. You no longer have crappy cable boxes with slow interfaces that crash, you don't have to wade through 400 channels of garbage. You can just launch the app you want, and voila! there's great content with great video quality ready to go.

The traditional cord is far from simple or effortless. It's a convoluted, user-hostile mess, but if that's what people are used to, then they feel comfortable with it, and don't want to change their ways. Once people change their mindset and mentality, then they find how much easier and better cord cutting really is.

It's somewhat generational too. I grew up in the 1990's, so I always had VCRs to time shift. Later, I had TiVo, and now I have mostly streaming. For someone who grew up in the 1950's, they experienced TV for decades through the lens of live TV only, and that model is ingrained in their heads. It takes some effort to realize that a whole new paradigm of TV is here, and it's better, cheaper, and easier than ever.

Live TV in the US is dying, yet TV is going through a golden age right now, with more great content than ever, thanks to streaming services, and at first, cord stackers, but now more and more, cord cutters.