Cord Cutting Continues, But The Rate Is Slow
Nielsen’s latest figures are out , and 1.5 million households gave up their cable subscriptions in 2011. That’s not a tiny figure—it’s a 1.5 percent decline—but it’s also probably not enough to convince the cable companies that they should be running scared of alternatives, or that they should reexamine their pricing or anything else about their business model. In fact, this is a case where the recession seems to me to be the enemy of innovation. As cutbacks go, cable is an easy and obvious thing to eliminate from your budget if times get hard. It’s a non-minor chunk of change, and you can make up a fair bit of the value around the margins or with a Netflix streaming subscription. Even if you buy a single season of a show on iTunes and parcel it out, it’s less money than a month’s subscription, and may feel like you’re spending your money in a more targeted way than you were if you splashing out for a whole cable package. Cable may be less expensive than, say, a family trip to the movies, but it is a fixed cost you can eliminate, rather than a periodic and discretionary one you can save up for as a treat. Given all of these things, I’d imagine the cable companies view the threat to their business model as circumstantial rather than existential. If cord cutting doesn’t just continue but accelerates once the economy starts to improve dramatically rather than incrementally, and if that trend continues over several years, then they might reassess. But companies tend to feel pain that’s a spur to innovation in a lag after individual consumers feel a pinch that causes them to change their behavior.