Monday, February 24, 2014

The Facts About Cord Cutting for Consumers: Debunking the Myths and Misinformation

Cord Cutting has become a prevalent term that may have innocently started out as an expression for the TV industry crowd to describe a declining trend in video subscriber acquisition, but the moniker has now spilled over into consumer vocabulary and is being widely reported by the media as a growing trend in consumer behavior. This in itself would not be a bad thing except for the fact that the term is being defined differently by just about everyone who talks about it (not always being fully informed of the facts), causing confusion for consumers.

Personally, we hate the phrase for many reasons, but that's a topic for a different post. For our purposes here we will define Cord Cutting in its simplest, truest form: the act of cancelling your subscription TV service. So, for the consumer, we have compiled this list of Cord Cutting fallacies and provided what we believe to be helpful and factual enlightenment to assist you in your Cord Cutting pursuits.

Myth vs. Fact

Myth:  Cord Cutting means having to get all of my content via the Internet.
Fact:  A huge chunk of your content is available through free over-the-air broadcast, no Internet required.

Myth:  Cord Cutting means having to watch TV on a laptop or mobile device.
Fact:  You can still watch both live TV and your favorite streaming services on your TV.

Myth:  If you Cut the Cord you have to give up live TV, including local news and sports.
Fact:  Free live broadcast TV has been around since the early 1950s, is still  available free through the use of a simple antenna, underwent a transition to digital format in amazing, crystal-clear HD in 2009, and includes all of the major broadcast networks including ABC, CBS, FOX, NBC, PBS, The CW and many more networks and sub-channels that your pay-TV service may not carry.

This particular myth happens to be one of our biggest pet peeves when it comes to defining Cord Cutting. The more than 20% of Americans who receive their broadcast TV programming solely from a digital antenna today can certainly attest to this, and it doesn't help when members of the media get it wrong.

This little clip is one of our favorites, although we feel a bit sorry for the newscaster. But if you are going to talk about Cord Cutting, especially with the man who is in charge of business development for Comcast, you should do your homework. To preface, The Grammy's aired on CBS, which is free broadcast TV! (Source: Bloomberg)


Myth:  If you get your broadcast TV content over-the-air through a digital antenna, you can't record it, pause live TV, or have a DVR experience.
Fact:  Nonsense. Get yourself a DVR for over-the-air broadcast programming. Channel Master happens to make one that is subscription-free, the DVR+.

Myth:  Potential Cord Cutters just want to stream video on mobile devices.
Fact:  Potential Cord Cutters are current pay-TV subscribers who are seeking a home TV solution that gives them an experience very similar to what they have in the home today - without having to be a tech guru and build their own DVR system using a home computer (and we shudder to think of the power consumption required in such a solution). This includes a familiar user interface, program guide, DVR functionality and the simple ability to watch TV on the big screen without having to use a mobile device to open an App and port or transfer content to the TV - again, probably not much of a concern to you tech gurus but definitely not a great solution for the bulk of TV viewers.

Myth:  Internet streaming methods and services are a viable solution for getting live TV programming.
Fact:  There are currently several solutions that provide access to live broadcast TV programming through the use of an Internet connection either for receiving the content or for viewing the content once received. These are all very cool and innovative solutions. However, each of these solutions requires a monthly subscription fee. And your recorded content may be stored in their cloud in some cases, requiring an Internet connection for access, rather than on your own hard drive.

In addition, you must also consider the ramifications of broadband usage on your home network. In today’s market in particular, we feel very strongly that consumers should not have to suck up bandwidth to get local programming that is already conveniently available over-the-air through a basic antenna. With everything going on in the broadband industry today – Net Neutrality battles, massive consolidation of ISPs, implementation of data caps, reinterpretation of copyright laws – why would you want to go that route if you don’t have to? If you can get that big chunk of your entertainment without having to tap your home network, it’s just the smart way to go. Then you can allocate bandwidth for all of those awesome On Demand streaming services.

While some broadcast networks will still allow you to view their content through their websites or On Demand apps, that content is not live and is often restricted in episode choice. In most cases the content is not provided to you on the same day as the live broadcast. ABC has already restricted their streaming app and their Hulu content to an eight-day broadcast delay unless you have a pay-TV subscription, and the remaining networks will likely follow suit.

We love Hulu, it's a great service, but it's not live TV and every broadcaster has a different deal with Hulu regarding what content they post and for how long, which can be very frustrating. And you can't zoom through commercials like you can with your DVR!

Myth:  People don't watch broadcast TV nearly as much as they watch cable network programming.
Fact:  Programming from the major broadcast networks actually represents what we believe to be the majority of what people watch on TV. TiVo’s website states that 85% of the content people store on their DVRs comes from local broadcast networks. DISH claims that a majority of the content on their DVRs is from the “big four” broadcast networks alone (ABC, CBS, FOX, NBC).

If you are a current pay-TV subscriber, go look at the screen that shows the timers that are set on your DVR. How many of those are for shows available on broadcast networks as opposed to cable networks? Obviously some people are going to be heavy on the cable network side, but for the majority of North American households we think you will find the ratio to be 50/50 at best if not a bit heavier on the broadcast network side.

Myth:  If I'm a sports fanatic I can Cut the Cord and be happy.
Fact:  If you can't live without ESPN or other popular sports networks, you are going to require pay-TV for what looks like a long haul. ESPN recently stated that they are doing everything they can to continue to support the traditional pay-TV delivery model. Do you need access to every NFL game, not just what's provided on your local broadcast networks? If your answer is yes, you're going to need DirecTV.

Sports programming is by far the most expensive content in the pay-TV package and it seems that things will continue to get worse before they get better. Just ask Dodgers fans, who will no longer have access to games on broadcast networks.

Myth:  Cord Cutting is not a real movement, is only media hype, and people are not ditching their pay-TV services.
Fact:  Service providers, as a net total, continue to lose video subscribers. Is it some kind of landslide phenomenon that has the TV industry running scared? Absolutely not. Cord Cutting is not for everyone. But yes, it is real. Our customers are not supplementing their pay-TV services with our products, they are cancelling their services altogether and relying on an economic mixture of subscription-free broadcast TV and On Demand streaming services.

In Conclusion

If you are considering cancelling your pay-TV service we hope that we have provided you with some useful information to help you with your decision. There are many changes happening in the TV industry today that are a direct result of the inevitable clash between outdated business models and new technologies. For the most part, the consumer remains blissfully unaware of the storms going on behind the scenes in the TV industry - until it shows up in their bill, which is what's happening today.

And let's make one thing perfectly clear: if you are getting your content through file-sharing sites or using someone else's pay-TV login information, that is called Piracy. Piracy is BAD. Not only is Piracy illegal and cheats hard-working Creatives out of their due revenues, it only serves to exacerbate the existing problems in the TV industry and make things worse in the long run for one and all... so by all means Cut the Cord, but please do so responsibly!

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