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Cable Technology Feature Article

March 12, 2014

Trouble Ahead for Cable and Satellite as Consumers Migrate

By Steve Anderson, Contributing TMCnet Writer

The idea of cable cutting, in which users throw over cable and satellite television for antenna-driven and online media like Hulu (News - Alert) and Netflix, has been around for some time. But for the most part, this was limited to a comparative handful of people: the technologically savvy, often the young, who understood how a computer or a little box near a television set could provide an alternative to cable television. The fourth quarter of 2013 survey from TiVo (News - Alert)'s Digitalsmiths, the “Video Trends Report,” shows just how bad things may be getting for both cable and satellite.

The Video Trends Report, prepared by a TiVo affiliate, engages in data mining efforts for TiVo subscribers in a bid to spot trends in the making such that companies can react accordingly. But this survey, however, was generally bad news for the established providers, which Digitalsmiths noted was proof that “...the competition facing pay-TV providers is now coming from all angles.”

Indeed, the Video Trends Report shows deeply disconcerting points for cable and satellite that may be sufficient to at least start the demise of an industry. 30.9 percent of respondents report being “overwhelmed” by the number of channels, while fully 88.2 percent essentially watch just the same few channels. 46 percent of respondents spent at least 10 minutes channel surfing over the course of the day, sifting through the variety of choices available, but 80.3 percent are consistently watching just 10 channels, or fewer. Interestingly, 53 percent would like to see channel guides start recommending content according to what the viewer prefers to watch, but just 19.6 percent of respondents are outright unhappy with the provider currently selected. Dissatisfaction continues to be a function of increasing fees, in both television and Internet service, with “bad channel selection” in third place. Video on demand offerings are getting socked as well, with between 72 and 73 percent of respondents are no longer ordering pay-per-view. But 45.3 percent of respondents are already turning to services like Hulu and Netflix to get content.

Essentially, as Digitalsmiths' co-founder Ben Weinberger (News - Alert) noted, consumers are “increasingly frustrated with the user experience delivered by pay-TV providers.” There are some efforts to fix this, of course, with new second-screen applications designed to help content discovery, but until new set-top boxes can be brought out that turn to an IP-base to provide more information, frustrated consumers may increasingly turn to the Internet for content.

This is a pretty big problem for cable and satellite, at least a problem in the making. Yes, only about a fifth of respondents are actively displeased, but that's a fifth that cable and satellite can ill afford to lose, and likely won't get back. With online sources providing plenty in the way of content, both new and old and even some that can't be had anywhere else, there's a lot of room for online sources to make a good case for making the switch. If online sources can offer the market better proof that said sources are just as good as cable—better in some cases—cable itself may well be doomed in the face of a cheaper alternative that can actually provide more content overall.

Only time will tell just what kind of job online sources can do against established cable and satellite provider competition, but this is an industry that's very much in a tossup position. We may well be looking at a whole new way of life soon, one that depends not on dedicated providers but on yet another use of the Internet.

Edited by Cassandra Tucker

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