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More Consumers 'Shaving' Cable Costs by Turning to Online Video

Continued concerns about users "cutting cords" and cancelling cable and satellite TV subscriptions still appear to be overblown. But more consumers are cutting back on their TV packages, "shaving cords" and finding content online.

March 21, 2012

Continued concerns about users "cutting cords" and cancelling cable and satellite TV subscriptions still appear to be overblown. But more consumers are cutting back on their TV packages, "shaving cords" and finding content online.

Just 3.7 percent of the 1,000 Americans surveyed by Altman Vilandrie & Co., a boutique management consulting firm, reported actually cutting the cord and stopping their subscription to TV service. But 20 percent of consumers say they now "shave," spending less money on cable TV service compared to the previous year, thanks to the wealth of online video.

At least 20 percent of those under 44 say they have "seriously considered" cutting the cord, however, Altman's survey found.

The findings were presented by Jonathan Hurd, a director with Altman Vilandrie, at the OTTCon in Santa Clara, Calif., on Wednesday.

Not surprisingly, young people between 18 to 24 are leading the way, with 31 percent claiming to be cord shavers. But that's flat compared to 2010, Hurd said. Instead, the sharpest growth appears to be in the middle-aged adults who head households: 28 percent of those between 35 and 44 claim to be cord shavers, up 9 percentage points from 2010. Strong growth in the 25-34 range (27 percent, up 4 percentage points) and 45-54 (16 percent, up 8 percentage points) was also reported.

Somewhat surprisingly, Scott Mirer, director of product management at Netflix, called cord-cutting a "fantasy" during a panel discussion on Tuesday. "Clearly, a lot of people would like this to be a reality, that there's this evolution coming, that everything's going to be different...but that's probably not going to be the reality," he said.

That the cord will be cut is unlikely because of the bundled services that a cable subscription enables, he said, including channels like Cinemax and Showtime.

Cord-cutting is even more unlikely if cable providers like Comcast add either Netflix or more Netflix-like video-on-demand services, said Richard Bulwinkle, an evangelist for Rovi.

"Appointment viewing" is also on the decline, Altman Vilandrie's survey showed, with just over 40 percent of those between 18 and 24 watching TV at its appointed time. Instead, those viewers are migrating online, where 64 percent of those surveyed said that they do so because of the ability to watch recorded TV shows when they want. Of those that do, Netflix and then network websites, such as ABC.com, were the preferred destination, the Altman survey showed.

However, it was the age range with probably the most disposable income, between 25 and 34, that indicated the strongest preference to watch their online video on tablets. Over half of that category said they watch Web video either daily or weekly. Close behind were the 18-24 range, at about 50 percent either daily or weekly, than 35- to 44-year-olds.

Altman also found that its respondents typically preferred a typical remote, then a . However, the survey found that 25- to 34-year olds preferred using a smartphone over the keyboard.

Altman Vilandrie performed its survey in July 2011.

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