Providing market intelligence for more than 35 years

Press Releases

Why Cord-Cutting Doesn't Work

Written by Brett L. Sappington, Director of Research

Since the dark days of 2009 when the term "cord-cutting" could be heard in nervous whispers around the halls of pay TV providers large and small, the industry has been anxious about the possibility that subscribers might just dump the whole pay TV proposition in favor of online video, Redbox, and other alternatives. Survey and industry data since that time has shown that while a segment of consumers are open to the prospect of a less expensive video option, consumers have not been abandoning pay TV in the droves that service providers had feared.

One of my colleagues at Parks (whose name is being withheld to protect the guilty), recently participated in an unanticipated cord-cutting experiment and learned why so few consumers are actually going this route. My colleague is a DirecTV subscriber and is having the roof of her house repaired, requiring that the DirecTV dish be removed for several days. As a technology analyst, she assumed that she could easily transition to alternative sources of video. After all, she had several connected devices in her home (game console, tablet, smartphone, computer) and content available from several sources. What she experienced was amazing frustration brought about by a fragmented and technology challenged experience. Here are some of the lessons that she learned:

DSL is the enemy of cord-cutters. Prior to the cord-cutting experience, she was quite happy with her "up to 10 Mbps" DSL service. However, once she began to stream content for display on the TV, she was met with either the "eternal wait of the buffered" or the ever-shifting, pixilated video that is common in adaptive bitrate streamed content. As a result, she now is completely dissatisfied with her broadband service (and provider) and plans to switch to a new service. The cheering you hear in the background is from those BSPs seeing another convert to a higher tier of broadband service. However, for parts of the US (and more so for the rest of the world), many consumers are living in a DSL world, making cord cutting a challenge.

Content discovery is still problematic. While my colleague had several options for content, finding something to watch was a greater hassle than expected. In many cases, the user interface to the content was slow, non-intuitive, or otherwise difficult to use. Often, the UI had search capabilities but no recommendations other than prompts of "if you like this show, then you will want to watch." Those services offering recommendations were easier to use, but only offered access to content from that site. So, she did not have a way to easily compile all of her options for consideration.

Content rights issues make content availability confusing. Knowing what content that she wanted to watch was, perhaps, even more frustrating than simply watching whatever was available and interesting. For one particular television series, certain episodes from the same season were available for viewing from the DirecTV site while others were not, making it difficult for her to watch a series online. In addition, she would have to go through the UI of differing options in order to see if what she wanted was available and on what screen. So, rather than having the freedom to watch on multiple devices, the actuality was having to watch what she wanted on particular devices based on availability, a far cry from the multiscreen utopia that has been sought by the industry.

At the end of the day, while consumers are initially interested in the potential monetary cost savings of cord cutting, the true, huge hidden cost of cord cutting is to the consumer's time. Each moment that the consumer spends trying to connect with content is one more moment that they are not being entertained. Consumers quickly catch on to little things like frustration, boredom, and how much easier it may be to simply turn on their pay TV service and watch.

Twitter ID: @BrettsView