Cord-Cutting May Be Myth Now, But Reality in 5-10 Years

Cord-cutting enthusiasts got a sobering dose of reality the last few weeks when a number of prominent analysts and research firms published data proving that consumers are rushing toward cable rather than away from it.

The cold hard facts: the three-headed multichannel beast otherwise known as cable operators, satellite providers and telcos collectively added 441,000 multichannel video customers in the fourth quarter of 2008.

Those statistics fly in the face of the conventional wisdom that in a recession consumers would cut back on cable services to save money, and they also go against the broader newteevee belief that TV fans can survive on Hulu, YouTube and iTunes alone. Because evidently we’re quite content with our oldteevee, thank you very much.

But, let’s pause and ask ourselves if maybe there is another side of the story. Because traditional television providers and programmers would be foolish to assume that net cable adds in the fourth quarter means everything is peachy. Sure, only 3 percent of online adults would pull the plug on cable to just watch video online, according to Leichtman Research Group, and we’re also watching more traditional TV than ever, according to Nielsen.

But what are teenagers doing?

The industry needs to peel back the layers in the research to understand what teens and young adults are doing now to be better prepared for business in 5-10 years. Consider this: Leichtman Research Group reported that while only 8 percent of web-video-watching adults say they watch less TV because of their web viewing habits, 18 percent of web video watching teens say they’re turning away from the tube thanks to the Internet.

“Yes, there are some teens who are watching TV less often, while the majority are still watching just as much TV,” Bruce Leichtman told us via email, adding that they’re mostly watching YouTube and music videos online rather than TV shows.

Any cord-cutting effect, if there is to be one, won’t manifest for almost a decade, Leichtman said. “It will be 6-12 years before this group is actually making decisions for themselves on whether or not they subscribe to a TV service – that they never paid for before, so it’s not really a cord cutting – so the impact of this group, accounting for about 9 percent of all in the U.S., could possibly be felt several years from now.”

Still, there is evidence that young Americans are slowly shifting their habits, and both Hollywood and the web world should pay attention to their behavior. Earlier this year, the research firm Solutions Research Group reported that that 70 percent of 18- to 34-year-old online Americans have watched TV online at some point, but only one-third of that group has ever viewed a show on a DVR or a TiVo.

While we as a society of video viewers aren’t thumbing our noses at Comcast, Time Warner and DirecTV right now, we might be in a few years. “It’s obvious to most that online will become the main platform for video entertainment,” said Kaan Yigit, an analyst with Solutions Research Group. “When we reach a true tipping point is debatable — some say five years, others 10. But it will happen, based on all the indicators.”

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