Thus far, the cable monopolies have weathered the onslaught of the Internet–which, one day, inevitably, will almost certainly blow up the pay-TV model and the massive profits it generates for the the cable companies and networks.
That process has and will be slow in coming, however, in part because it’s in the interests of both cable companies and the content providers to do everything they can to defend the status quo.
Slowly but surely, however, the Internet is penetrating the defenses.
Netflix and Hulu are streaming TV shows and movies. Apple and Amazon are selling them. The US Open, the Masters, and other sporting events are starting to stream live coverage online. ESPN is coming to XBox. Major League Baseball is offering access via iPhone apps. NFL Direct Ticket is available online. And so on.
And now we’re beginning to see some evidence that, when faced with a money-crunch (which more and more Americans are), households choose the Internet over their cable TV.
In the future, “over-the-top” video solutions will get more comprehensive, more robust, and more convenient. And, as they do, the decision to pay a cable company $100+ per month for 500 channels you don’t watch will seem ever-more ludicrous. So, at some point, unless the cable industry starts cutting prices instead of raising them, this trend will probably accelerate.
Here’s some data from a survey Wedbush Morgan analyst James Dix did recently, via Claire Atkinson of the New York Post:
In a survey of 2,500 consumers, 7 per cent said they had stopped using basic cable service and 12 per cent reported cutting their premium cable or satellite services. Two per cent of respondents cancelled their Internet connections.
“There is evidence of cord cutting,” said Dix, who commissioned a consumer survey as a result of investor concerns about how widespread cord cutting is.
Dix also found that cord cutting was more related to income than age, despite the common view that younger consumers would be among the first to abandon traditional pay TV.
Homes with income under $50,000 cancelled basic cable at the highest rate, 8 per cent, while only 3 per cent of higher-income homes, those at $100,000 and above, axed basic cable, according to the survey.
Those numbers include those who may have switched to other TV options such as Verizon FioS. When asked about their expectations for next year, 21 per cent of households in the under $50,000 bracket said they’d cancel their basic cable next year.
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