5 million Americans cut cable's cord

What interesting timing. The same day Ericsson agrees to buy Mediaroom from Microsoft, Nielsen releases fascinating report "Free to Move Between Screens". The two things are strangely related. A decade ago, the IPTV division made more sense. Today, television habits are changing, something Microsoft brianiacs apparently recognize and others would be wise to do likewise. Nielsen hints at the future.

Consider where we are in just three years. Before iPad's launch in April 2010, few US television networks (I don't know that any) offered two-screen experiences. Now they're commonplace, under the presumption millions of Americans sit with tablets in front of their boob tubes (and they do). HBO Go launched two months earlier. Go back six years, you have Amazon, Apple and Netflix streaming and Hulu's launch. Along with the DVR's rise in popularity, how Americans consume television programming dramatically changes.

Zero-TV Households

Among the changes underway: The slow, but steadily, increasing number of people cutting cable's cord. Nielsen classifies cord-cutters as "Zero-TV" households. There are enough of them (5 million, up from 2 million six years ago), that Nielsen will begin tracking Zero-TV homes for its traditional ratings service starting in the Fall season.

The analyst firm isn't solitary assessing the significance of this growing population. For example, HTC, which announced dismal quarterly results earlier today, will spend 40 percent of the One smartphone's marketing budget on digital properties, taking away from TV-ad spending. "Seventy percent of our target audience consumes [TV] content online", Erin McGee, HTC's veep of North American marketing, tells AdWeek. Can you say cord cutters?

Three quarters of Zero-TV households have television sets, but two-thirds get content on other devices and 48 percent watch TV through subscription services, according to Nielsen. In the homes using other devices to view television programs:

  • 37 percent PC
  • 16 percent Internet TV
  • 8 percent smartphone
  • 6 percent tablet

Cord-cutting households tend to be younger -- 44.4 percent under 35, while 43.7 percent of traditional TV homes are 55 or older and 64.5 percent are 45 or older.

Cost (36 percent) and lack of choice/interesting content (31 percent) rank as major reasons for breaking free from cable, IPTV or satellite providers.

Fox Freaks

While 5 million may not seem to be that high a number, it looms in context of changing habits, where consumers use other devices alongside TVs as first step to displacing or replacing them.

Some networks are increasingly antsy. The annual National Association of Broadcasters trade show is underway, and there New Corp. president Chase Carey threatened to move the Fox network to subscription cable should Aereo prevail in court proceedings permitting the streaming of Live TV broadcasts. Further in a statement, News Corp. explains:

We won't just sit idle and allow our content to be actively stolen. It is clear that the broadcast business needs a dual revenue stream from both ad and subscription to be viable. We simply cannot provide the type of quality sports, news and entertainment content that we do from an ad supported only business model. We have no choice but to develop business solutions that ensure we continue to remain in the driver's seat of our own destiny.

This the same company that put up so many Wall Street Journal paywalls and so exorbitantly raised subscription prices that I cancelled my renewal in 2011. That was a digital subscription. You don't misread. I got my digital sub in 1996, long before most anyone did. Fifteen years gone just like that.

News Corp.'s reactionary stance surely reflects defensiveness and concern that the Internet could do to television what it has done to other media categories. Fox's problem isn't free streaming of its broadcasts, particularly if commercials, etc. remain in place, but services like Amazon, Hulu and Netflix -- all which broadcast original programming -- becoming full-fledged networks.

I'm In

I certainly could join those 5 million. Amazon and Netflix satisfy most of my family's TV-viewing needs. If Google TV offered Hulu -- and I'm strongly considering Roku to get it -- we would probably cut the cord. Should HBO Go become a separate, reasonably-priced streamed service and other premiums follow, subscription TV simply wouldn't make sense for us. But then again, sports and pay-per-view aren't important to anyone in my household. They're programming many other people want and that makes cord-cutting impractical for them.

The Wilcox clan rarely watches live TV anymore. We just record shows and skip the commercials. Why bother with any? Streaming services like Amazon and Netflix do away with the ads, Hulu offers far fewer than broadcast and rented or purchased programs have none anyway.

Surely the Microsoft brainiacs see this as a future trend, and one supporting future Xbox and Xbox Live content. Mediaroom made sense when Microsoft got into the IPTV market nearly 15 years ago. Telcos would be better off bundling Roku-like boxes than building out massive server, software and set-top box architecture to support traditional TV. Is that part of Ericsson's plan? Time will tell.

Circling back to cord-cutters. Are you one?

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