Monday, February 15, 2010

Cable is Saved?

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.

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.”

From the article, "Cable is Saved?" by Jim Louderback

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