If you’ve read that the rate of US cord cutting is about to speed up and also about to slow down, don’t feel confused; It’s all in the nuances of what is no longer a simple household decision to “stick it to the man.”
Bruce Leichtman is principal of Leichtman Research Group, a broadband, video and TV research firm that I pay attention to. He joined me on Now What to explain what’s really happening with cord cutting and how the major TV and broadband companies are playing it — and perhaps us.
“When SlingTV launched, if someone wanted to cut the cord and feel great about sticking it to the man, they could do that,” says Leichtman. “But this is five years later; Hulu Plus Live TV, YouTubeTV, and AT&T NOW are all part of the pay TV industry.” And while Netflix and Amazon Prime Video are a breed apart, they’re usually part of a blend that still includes pay TV in most US households.
The strength of early leaders Netflix, Hulu and Amazon is remarkable. “76% of households in our recent online survey had one of Netflix, Hulu or Prime,” says Leichtman. “When you add DIsney Plus, it only adds 1 percent. Add in six (other services) and that only adds 2 more percent.” Those who have streaming video in their households are adding more layers of it at time of peak choice, which could soon prompt the question of which streaming services to drop.
“What every company has to look at is, what is the glue”, says Leichtman. “For cable, one piece of glue was always the bundle between TV, broadband and phone. For Disney Plus, they have glue in combination with Hulu and ESPN. Netflix’ glue is the product — more and more content.”
They may not miss you
Millions of US households have cut the traditional pay TV cord, but whether they’ll be missed is another question. “Providers are being much more disciplined in who they’re going after; They’re looking for profitable subscribers,” says Leichtman. “In 2019, we saw about 5 million (subscriber) losses for the major pay TV providers.” AT&T accounted for 80% of those lost pay TV subs, Leichtman says, “but they increased their revenue per subscriber. So while they lost 15% of their subs, their revenue only dropped by 4%.”
“Keep in mind what we call ‘cable providers’ are now broadband providers; Their main source of earnings is broadband,” says Leichtman. “The traditional pay TV business is not as much a priority for them as it used to be.”
The Quibi question
Mobile-only “quick-bite” streaming service Quibi is one of the top video stories of 2020, but it never planned to launch during a pandemic. “Quibi is launching at a unique time, with everybody in the home,” says Leichtman. “Even if it had launched two months ago, the challenge is that more and more internet-delivered video is watched on the TV set. The Quibi concept is on the go, and with people not on the go, that challenges it. But it’s a long run, and keep in mind they are launching for free for 90 days.”
NBC’s Peacock service launched as a sneak peek in mid-April 2020, and HBO Max may be the last major shoe to drop when it launches in May 2020, at which point the “streaming wars” will be fully joined. Take our quick poll and let us know if you’re jumping in, or seeing how it all shakes out.
Leichtman had much more to say about pay TV and streaming, so watch the full interview for more.
Now What is a video interview and panel series with industry leaders, celebrities and influencers covering the major changes and trends impacting business and how consumers connect in the “new normal” 2020 world and beyond. There will always be change in our world, there will always be technology helping us navigate that change, and we’ll always discuss surprising twists, turns and potential solutions.