Wednesday, August 10, 2011

193,000 people stopped paying for cable. Sign of the times?

According to Giga Om, 193,000 people decided to stop paying for cable last quarter. That number comes from looking at the industry as a whole and mainly includes just the top tier providers. Losses could be even more if we had data on the smaller regional providers.

There are multiple things going on here to push people to "cut the cord." Providers are now focusing on get a larger average revenue per user (ARPU) instead of fighting to keep existing customers. Customers are now becoming more frugal,  cutting more and more things out of their lives. While these two situations make up most of the 193,000 there is still one other group they may not be represented in the stats.

I'm a student of disintermediation. The belief that the internet fosters peer to peer relationships, naturally cutting out the middle-men. In the television industry you have actors, directors, producers, cable executives, content distributors, and the list goes on. With so many hands in the proverbial cookie jar it's a wonder that we can get TV as cheap as we do.

What if though one man could get a few people together and record his own show and then directly deliver it to his viewers for free? It's already happened, go to live.twit.tv and check it out. But an ecosystem like that is more cost effective and more efficient. Plus it's the viewers that provide feedback on whether the show is good or not, not executives in an ivory tower.

TWiT, which stands for This Week in Tech, is a professionally made show that blows some network TV shows out of the water. It's only a matter of time until more content creators of the same level start popping up. Netflix and Hulu are currently bridging the content gap on online viewing. It's possible to get a great TV viewing experience living on the web alone.

There are those that believe that web only TV viewing is the way to go. While most people cutting the cord are probably those who want to save some money, there are those that cut the cord out of principle.

The internet makes it possible to produce and create a show with very little investment. This is going to cause a huge paradigm shift over the next few years. Currently most principled cord cutters are also early adopters but there's a growing amount of people who aren't necessarily tech savvy but are going to online only viewing. That will become more common as more well produced shows start popping up on the internet and other technologies allow us to get more content easily over the web.

Some of the evidence that this change is gaining momentum includes the fact that cable internet providers (who also provide content) are thinking about blocking or charging extra to access Netflix. Online only viewing has become a large enough of a movement to get the attention of the cable providers. Let's hope that their response isn't litigation which was the response of radio stations who didn't like satellite radio.


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