Consumers have reached price limit, but cord cutting isn't a problem yet, panel says

SANTA CLARA, Calif. -- Culling their collective surveys and studies into a somewhat cohesive voice,  a group of top media industry research analysts told a Silicon Valley conference panel Tuesday that cord cutting is indeed occurring, but only on small levels, and that consumers "have reached their limits" in terms of pay-TV pricing.

"About 4-5 percent of those we surveyed in non-pay-TV households don't subscribe to a [pay TV] service because they have online video alternatives," noted Howard Horowitz, president of Horowitz Associates Inc., who added that 25 percent of those polled in his company's annual survey are considering ditching their pay-TV service.

"But while we're seeing a lot of interest, we're not seeing a lot of actual cord cutting," he added.

Horowitz spoke alongside colleagues that included Dana Hurtig, senior VP of operations at Rentrak, and Jonathan Hurd, director at Altman Vilandrie & Company, who gave attendees at the morning session, held at the BroadbandTVcon gathering at the Santa Clara Convention Center, a chance to see top industry analysts corroborate their findings with one another.

Hurtig said that while increasing subscription costs for pay-TV services are issues for polled consumers, the inability to see live sporting events and first-run programming as it premieres any other way remains a compelling market driver.

"What's really striking is the power of live TV," Hurd added. "And about 74 percent of consumers we've polled want to watch new shows when they air. It's almost like social media has returned TV to this era in which everyone wants to watch programming at the same time."

While the analysts agreed that TV Everywhere initiatives are "adding value" to the overall pay TV experience, Hurd noted that only about 35 percent of his company's survey respondents know about TV Everywhere offerings made by their pay-TV service.

"Despite TV Everywhere's deficiencies, it's still [pay TV's] game to lose," he noted. 

Hurtig also addressed the issue of "cable plussing"--the notion that online video is somehow accretive to the pay TV industry. "To some extent, the online surge is really addititive, and not so much cannibalizing [pay TV] to the point that the media might believe."

Meanwhile, Hurtig said that pay-TV operators have a customer service advantage over insurgent services such as subscription video on demand. If you're watching Netflix (NASDAQ: NFLX), he said, "Who do you call if your customer service experience isn't what you expect it to be?"

Hurtig, however, did not reference the consipicously poor customer service records of leading pay TV companies including Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC). 

Related links:
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