Memo to Cable Cos: Cord Cutters Aren’t The Issue

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As Todd Spangler points out over at Multichannel News, it seems the press has caught cord-cutter fever. Reading this Washington Post piece, you’d think we’ve entered some sort of Pay-TV apocalypse in which robots battle hipster armies who consume all their video entertainment on Macs, at least when they’re not making music videos.

Others are more skeptical. Analyst Bruce Leichman believes the idea of cord-cutting is a result of mother-in-law research, and any serious analysis would show that its only a tiny fraction of users that have actually cut the cord. Regardless of who’s right, cord-cutting is a red herring. Because the number of cord-cutters will remain small and most will retain some form of pay-TV service, the bigger concern for incumbents is consumers who over time choose to consume more video entertainment from over-the-top sources like Hulu and less from Comcast. It’s these folks — and not the all-or-nothing cord-cutters — who will be the biggest percentage of consumers in a few years.

So what should incumbents do about it?  Quite simply, they should embrace it.  Ask any analyst and they’ll tell you triangulated data — meaning data that is reinforced by various factors — is more valuable than isolated information. With a multi-platform video customer — that is, a viewer of pay-TV, online, and perhaps even mobile video — an operator has more ways to understand the consumer.

In other words, if all your data told you was your customer watched American Idol on broadcast TV but didn’t tell you the same customer watched Meet The Press online, you’d have a much different — and less accurate — consumer profile.

While carriers realize the value of owning the consumer, their view is largely one-dimensional, usually filtered through a prism of bundled-services and resulting ARPU. If they start to think of multiplatform video consumption as a way to better understand the consumer, this will result, in the long term, in a higher marginal return on each consumer through more targeted advertising.

Google understands this; its efforts to own the consumer’s web activity (and to profile that behavior) aim to make the customer more valuable to them and their advertisers. The result, if we can get past the Big Brother and potential privacy aspects, is more targeted advertising as well as unified information and web services for the consumer.

If pay-TV operators take the same approach by embracing the consumer through whatever platform he chooses, they will know them better, and be better off — as will their ad partners.

Question of the week

Do you think cord-cutting will be as significant a problem for pay-TV operators as it has been for fixed-line voice operators?

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