Is cord cutting happening? Maybe; but OTT delivery is the real deal

Jim O'Neill

Cord cutting is a major threat to the pay-TV industry. Cord cutting is a myth.

It's not about cord cutting, stupid, it's about cord swapping.

Pay-TV is a rip off. Pay-TV is the best deal in town.

Over-the-top delivery is the wave of the future. OTT delivery is over blown and will never work.

Here it is, barely February, and my New Year's Resolution to not write about cord cutting has already joined my resolution to learn Italian and only drink scotch on Fridays.

But, how can I resist? In the past week, I've read--or heard--every one of those sentiments from journalists, experts, pundits and hangers-on in the online video space.

It's startling how passionate everyone seems to be about the topic of over-the-top video and its impact on the pay-TV industry. I guess that's not really unusual considering that there are fortunes to be made--and lost--in the pursuit of OTT nirvana.

Nevertheless, it's disconcerting to read some of these things; by the tone you just know the writer is POUNDING on the keyboard, neck veins bulging as he proves/disproves one argument after another in an effort to be the only one who got the cord-cutting/over-the-top conundrum right. But here's the problem. Everybody's a little right, and, you guessed it, everybody's a little wrong. It's too early to really call this horse race; some of the ponies are just stepping up to the starting gate, some are there but have forgotten how to run and, well, some just don't belong there.

Last week, Nielsen SVP Howard Shimmel said the industry watcher didn't see any significant cord cutting happening. In a Beet.TV report, he did say that there was solid evidence of "cord swapping" going on, the practice of consumers chasing the best available deal from their cable, satellite or IPTV operator.

But he also alluded to a trend that should be something operators lose sleep over: there's an increasing number of 25- to 34-year-olds who have never had cable and say they have no interest in it. Instead they get their TV fix watching TV shows online.

Cable execs are prone to say they're not really worried about that group because, "as they grow older their lifestyle is likely to change," meaning, of course, that those young cablephobes will eventually settle down and get that cable hook up.

That, frankly, is one of the dumbest rationalizations I've heard, and it's akin to the logic I remember hearing from the newspaper industry as it lost young readers to, queue the music, television.

For years, newspapers maintained that "as soon as the kids settled down and had families and responsibilities they'd go back to reading newspapers." It was, they said, a matter of civic responsibility.

Guess what? That never happened. And newspapers continue to lose circulation as new media takes over. As poet George Santayana said a century ago: "Those who cannot remember the past are condemned to repeat it."

But, even without history, we should be able to see that a significant change is happening.

That viewing habits are different today is unquestionable. Netflix now has more subscribers than any other paid operator except for Comcast. Online movie sales are headed up, DVD purchases and movie ticket sales are headed down. Hulu, thanks to CEO Jason Kilar, is becoming more mainstream daily.

I watch as much TV as I can justify (or make excuses for). I have cable, have used U-verse, and play with every OTT device I can get my hands on. And you know, I've found that I can watch as much football, and all the network TV I want using a digital antenna, I've used all of the recent OTT devices to scrounge other content and happily get my movie fix from Netflix and Vudu. My subscription to Hulu Plus delivers all the content I missed from the TV networks, and it does it with a better interface than the one I get from my cable operator. True Blood and Dexter? I'm still catching up, but there's no hurry.

Will OTT replace cable? Not today, not tomorrow. But who can be certain that it won't eventually?

No one. Not you, not me. No one. Is cord cutting a myth? I don't know. What I do know is that OTT delivery is getting better all the time, and I also know that even though it's not yet Friday, and pardon my Italian, penso che ho bisogno di un bicchiere di whisky. Ciao. -Jim