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When you’re drowning, you grasp at straws to try to stay afloat. Sometimes you actually convince yourself that you’re standing on dry land. That seems to be the collective response of the traditional TV industry to a recent survey from Parks Associates.
The market research firm company found that only 8 percent of U.S. households are thinking of abandoning their paid multichannel services. Why is that good news? Well it’s down from the previous year’s survey, which showed that 11 percent were considering “cutting the cord.” Even better, according to Parks, only a very small amount, perhaps a half percent -– which translates into 350,000 homes — have actually followed through on their intent. You could practically hear the sigh of relief — cable is saved!
I have three problems with this giddy response: math, measurement and morbidity. Let’s get the math out of the way first. Parks surveyed 2,100 of what it calls “broadband households” -– those with access to high-speed networking at home -– to come up with its results. Modern statistical theory holds that a random group of that size can comfortably be extrapolated across an entire population, albeit with one caveat: Depending on the population surveyed, there’s what is known as a “confidence interval,” or what you and I would call a “fudge factor.”
Such padding extends up and down on either side of the actual number. In this case, the confidence interval is 2 percent, which translates into a 4 percent swing centered around the 8 percent number reported in the results. In practice, it means that based on the 2,100 people that the folks at Parks talked to, they are pretty darn sure that the actual population of people considering switching is no smaller than 6 percent of U.S. and Canadian homes with broadband, and no larger than 10 percent.
In last year’s survey, Parks talked to a few more people, but with the same confidence interval. Which means Parks is pretty darn sure that the actual population of people looking to cut the cord last year was between 9 and 13 percent.
Some of you have figured out where I’m going by now. If this year, the number lies between 6 percent and 10 percent, and last year it lay between 9 percent and 13 percent, isn’t is possible that, perhaps, there’s been no actual change from year to year? It could, in fact, have been 8 percent, and 8 percent year-over-year. Or maybe it was 8 percent last year, and it’s up to 9 percent this year. Or perhaps 13 percent were considering changing last year, and only 6 percent are mulling it over now.
Any of the preceding interpretations would be correct, based upon the statistical validity of the survey. However, John Barrett, director of research at Parks Associates, insisted to me that there is a “significant difference, but not a substantive difference” between the two surveys. Or, in layman’s terms, it’s a lot closer to a single household feeling better about cable than a million. Barrett added that in his opinion “the number hasn’t changed that much itself.”
Which brings me to measurement, as in measured audience. The question in this survey was only posed to broadband households that also subscribe to cable or satellite TV. It ignored everyone who didn’t subscribe –- which was between 10 and 20 percent of the entire sample size. And media habits, like other addictions, are hard to change. If you’ve got cable now, you’ll probably still have cable 10 years from now.
This is especially relevant when it comes to demographic currently getting out of school and setting up their first households –- the 18- to 24-year-olds, who haven’t had a chance to get addicted to multichannel TV services. And since if they don’t subscribe already they probably never will, they’ll likely never even show up on a “cutting the cord” survey. Indeed, Method VP John Gilles calls this cohort “Cable’s Lost Generation.” “For at least the past five years, the young male demographic has virtually dropped off the map of television,” he notes.
The issue isn’t existing customers dropping off; it’s existing customers dying off that should be of concern. That’s because new customers just aren’t taking their place.
Which leads me to morbidity. This is exactly what happened to magazines over the last 20 years. Whether it’s Readers Digest, TV Guide or PC Magazine, each of these storied titles used to have viewers aged 16 to 60. Then it was 26 to 60. And then 36 to 60. In other words, the audience aged to the point where it just wasn’t economical to keep putting the product out. I should know, because I was there during the salad days of PC Publishing, and darn near turned the lights off at PC Magazine in 2007.
And that’s the cliff that the multichannel industry is staring at today. Its best and brightest can wrap themselves in giddy surveys that show only (only!) 8 percent of their audience is considering leaving. But the broader problem is that their customers are dying. And no new ones are there to take their place.
Jim Louderback is CEO of Revision3. He was previously vice president of Ziff Davis Media and Editor-in-Chief of PC Magazine and PCMag.com.