It seems not everyone involved in the cable business is blind to the reality of online video and the trend for cord cutting. But will the warning from the CEO of Verizon fall on deaf ears as so many others have done before?
Cord-Cutting
Cord-cutting in this context is the act of cable customers canceling their TV subscriptions as they realize online video can fill the void left when they do so. And with much of it free, or highly-affordable (especially when compared to the average cable bill) these people are saving a lot of money every month.
This year has seen much talk of cord-cutting and the effect the trend will have on cable companies. Some estimates suggest one-in-eight U.S. households will cut the cord this year, while Nielsen suggests the whole thing is nothing more than a myth.
The truth is probably somewhere in between the two.
Verizon CEO Issues Warning
Most of the cable executives are with Nielsen, claiming that cord cutting is a myth. At least that’s what they say in public. I’m sure in private they’ve had plenty of meetings about it, unless they really are sticking their heads in the sand and hoping it all goes away.
Verizon CEO Ivan Seidenberg spoke at Goldman’s media conference and was pretty forthright in his views on cord cutting. He said:
Young people are pretty smart. They’re not going to pay for something they don’t need to. Over the top is going to be a pretty big issue for cable. We take the over the top issue with video very seriously. I think cable has some life left in its model…but that it is going to get disintermediated over the next several years. I’ve seen the movie. If you remain static too long, the technology is going to nibble at you on the edges, and you have to be prepared for it.
The recession seems to have kick-started the cord cutting trend, with people not actually able to afford cable any longer. This coincided with more and more companies offering over the top TV and video services. So we have a problem and a ready-made solution.
The worst of the recession may now be over, but the trend to cut the cord is only just beginning.
Conclusions
How sad it is to see the cable companies, the TV networks, and the movie industry fighting tooth and nail to hold onto the old way of doing things. It’s time for these entities to wake up, smell the coffee, and either adapt or die.
Cord cutting is real, is set to become more popular over the next few years, and those companies which don’t evolve in order to survive in the new reality risk becoming dinosaurs. Which are, let’s not forget, extinct.
[Via Media Memo]
