So-called cord cutters are still bound to service providers

Jim BartholdThe so-called "cord-cutters" generation of TV viewers who have eschewed anything resembling their fathers' cable/telco/satellite systems for their own brand of rebellious find-it-on-the Internet or through the air and watch it on the iPad/iPhone/laptop lifestyle, are in vogue. On their blogs, they fashion themselves as guerillas, finding the best available content and viewing it without paying "the man" for the privilege.

"Online Television--Kiss your Cable Company Goodbye," screams a headline on the TV 2M blog, fueling the belief that the under-25 generation is mad as hell and they're not going to pay for it anymore.

To some in the cable industry they're modern day pirates who don't climb poles to tap into the coax but poll each other to find and share content that someone, somewhere, has bought and paid for. Their goal is not to cut wires, per se; it's to ignore them.

Other parts of the cable industry, primarily the programmers, are looking for ways to sate the appetites of this new breed of trendsetting viewers. It's just difficult to know whether these cord cutters are actually a trend, the tip of a trend or just an anomaly. Market research, often helpful in these instances, only adds to the confusion.

For instance, the Leichtman Research Group (LRG) found that people weren't cutting their ties to their traditional service providers; they were growing closer to them in greater numbers. The organization issued a news release that said flatly "the largest cable, satellite and telco TV providers in the U.S. acquired over 1.7 million net additional multi-channel video subscribers over the past year."

Cable Show 2010 show floorPart of this gain, no doubt, came from the hoards of Americans who rushed to cable, satellite and telco because their local off-air stations went digital and therefore disappeared from their rabbit ear-connected TVs. Since they needed a box to get television anyway, these folks figured, why not a cable or satellite or telephone box that brought the bonus of a few more channels for a few more bucks?

That's a one-time thing, but what LRG described doesn't sound like a temporary lapse in a downward trend of people leaving their service providers.

On the other end of the spectrum, an eMarketer article said 77 percent of all Internet users in the U.S. will watch videos online by 2014. This growth is being fueled by that ever-dangerous group of under-25-year-olds who will get so used to watching their video on the Web that a whole new range of devices and content will grow up to serve them.

"If the first iteration of online video was about silly pet tricks on YouTube, the next wave will be about professionally produced full-length content such as TV shows, movies and live sports," said Paul Verna, eMarketer senior analyst. "This shift will be propelled by a combination of technology integration, demographics and a growing comfort level with the idea of watching video hosted on websites."

There is an element of truth to both of these prognostications. That's why Cablevision Systems is driving so hard at the WiFi space; why Comcast and Time Warner have partnered with Clearwire to get WiMAX out to as many of their subscribers as they can; and why Cox Communications will any day now deploy a 3G wireless system of its own.

Youth must be served and youth wants to be untethered. The thing is, though--and it's the thought that has kept cable TV in business since those first wires were strung well over a half-century ago--nothing is untethered. Everything, somehow, is tied back to the wireline service providers.

Cord-cutting is trendy, and it's creating a cottage industry of new types of content and new types of devices. It's causing an interesting dynamic that, in the end, could determine a new way that content is delivered. When it will happen and how it will impact wireline providers is, of course, the big question and the big debate.

For more:
- see this story
- and this news release
- and this blog

Related articles:
Report: Online video platform segment a $1B industry in 5 years; a few big players will dominate
Rumor mill: Subscription Hulu is coming to iPad
Google TV and the OTT space: Winners and Losers? It's still a wide-open game
Time Warner exec says cable company plans IPTV test

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