No sooner did SNL Kagan's press release, announcing that the U.S. pay-TV industry had lost 119K subscribers in Q3 '10, following a loss of 216K subscribers in Q2, hit the wire today, than the blogosphere was alight with a fresh round of posts that cord-cutting was to blame. This chorus was surely egged on by Kagan senior analyst Ian Olgeirson's remark in the press release that "it is becoming increasingly difficult to dismiss the impact of over-the-top substitution on video subscriber performance." That remark was a notable change of tone from Kagan's Q2 release which ascribed subscriber losses solely to the country's ongoing economic woes.
Note however that Olgeirson only offered his opinion, rather than any actual, hard data from Kagan about cord-cutting's impact. That is characteristic of both sides of the current cord-cutting debate - lots of opining, but little-to-no reliable data. In my own Q3 analysis - in which I suggested that the pay-TV as a whole likely lost around 97K subscribers in Q3 (though the group of 8 of the top 9 pay-TV operators actually gained subscribers) - I noted that nobody truly knows the impact of cord-cutting, yet anyway.
For now, whenever you read a story about the Q2 and Q3 losses being blamed on cord-cutting, the author's assertion is based either on anecdotal evidence, unreliable surveys of consumer intentions or nothing at all. Meanwhile, on the other side of the debate, pay-TV industry CEOs have insisted that they've seen no evidence of cord-cutting in their churn numbers, but haven't provided any further detail to support their claims.
What's happening here is that cord-cutting is an extremely sexy story to many in the media industry because it resonates with pent-up hostility that many pay-TV subscribers have toward their respective providers. It's also another in the long line of "power to the people" themes that have been around since the Internet first burst into the public's consciousness. Put simply, people love the idea that the Internet creates choice, and cord-cutting lets them "stick it to the Man" who they think has been ripping them off for years.
Given how high pay-TV rates have become and how convoluted the channel packaging often is, the industry has practically asked for the cord-cutting tidal wave to crash down on its party. Still, with no hard data yet to rely on, it's very unclear just how important the cord-cutting trend actually is. This lack of facts is hardly an obstacle to the cord-cutters' parade. Who knows, maybe when actual data is available, their conclusions will be supported. Regardless, in the mean time, I don't foresee any letup in the cord-cutting drumbeat unless the pay-TV industry somehow shares some irrefutable data to the contrary.
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