Pay television: Americans cut the cord

Article  by  Matthieu REBOUL  •  Published 23.05.2013  •  Updated 23.05.2013
De plus en plus d'américains résilient leur abonnement au cable
[NEWS] Five million American households are set to put an end to their cable subscriptions this year. More than a rejection of television, this phenomenon reflects profound changes in how video is being consumed.
Panic has set in for American cable operators: following their decades-long reign over American television, they are now facing a growing wave of cord-cutters – those households that have decided to end their TV subscriptions altogether. According to Nielson, they now represent some five million households, up from two million in 2007.
 
Cord-cutters are hardly former television watchers who have decided to renounce their video habit. Far from a rejection of television, this phenomenon reflects changes in modes of consuming audiovisual content, as well weariness in the face of the overabundant, non-personalized – and above all, extremely expensive – offers of cable operators, whose quality of service has been subject to repeated user complaints. Cord-cutters prefer to turn to the Internet, where ever-growing speeds now allow for satisfactory television reception, with 100% personalized, substantially less costly offers; and they are more than willing to use other household screens – computer, mobile phone, tablet – or invest in a connected television.
 
Unsurprisingly, cord-cutters encompass younger individuals. Increasingly, they are also “cord-nevers” – that is, young people who move out on their own and never set up a television subscription, as Internet fully meets their video consumption needs.
 
Internet indeed provides an array of offers – legal or not – that are increasingly attractive in terms of video: alongside platforms such as YouTube, with success based on content of variable quality, services offering professional content for an ever-growing audience are multiplying. The pioneering Netflix, for example, now counts some 29 million subscribers, who are able to choose from a selection of content available elsewhere, now available alongside original content as well, thus infringing upon the territory of the major networks and studios themselves.
 
The situation logically worries traditional players in American television, who rightly see this as a challenge to their business model. Revenues linked to distribution are affected, in that they directly depend on the number of subscribers. And even more worrisome for channels: revenues tied to advertising may also be affected in the medium term, as they are based on traditional television audiences, and don’t take into account viewers of other screens. Nielson, which measures television audiences in the United States, has taken these fears into account: the institute has recently announced a methodological change in order to better measure the online television audience.
 
In parallel, operators and channels are attempting to find solution to respond to emerging user expectations. In an attempt to preserve existing models, the former are not hesitating to invest in exclusive content likely to hold onto subscribers. At the same time, they are seeking closer ties with Internet providers to provide overarching offers allowing consumers to have a single subscription for television and Internet. Channels, meanwhile, are multiplying their attempts to better cash in on their online content without having to turn to costly intermediaries. Among the best known, a number of major networks and studios including ABC, NBC and Fox have been working together since 2007 to offer substantial free content for users on Hulu. In a truly revolutionary move, meanwhile, HBO is considering directly selling its content online via its platform HBO Go, which has up until now only been available to its cable and satellite subscribers.
 
Internet has now become a sufficiently attractive video crossroads, justifying the abandonment of traditional television by millions of American households. While still relatively marginal, the cord-cutter phenomenon is set to take on greater importance as new generations of digital natives move out on their own. This redistribution of the cards is obliging U.S. television players to innovate – and the clock is now ticking, as a great many Internet newcomers are striving to align their ambitions with the emerging behaviors of television viewers.
 
Translated from French by Sara Heft
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Photo Credit:
Dan Tantrum / Flickr
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