NEW YORK--While a new generation of cord nevers may be willing to put up with occasional poor streaming quality of online video, cord cutters--that coveted group of past pay-TV subscribers who have ditched linear video service for Internet viewing--might return to the pay-TV fold if their streaming experience is bad.
The differences between cord cutters and cord nevers is so pronounced that "any company targeting these consumers must think in terms of two distinct packaging and pricing strategies," an online video research firm says.
When you're watching a whole new generation forsake your distribution scheme, and you're seeing your advertising dollars slip away to digital platforms, you do what you have to do to survive. That's a philosophy many pay-TV providers are beginning to adopt as they develop lower-priced offerings that cater to a cord-reluctant generation of millennials. FierceCable Editor Dan Frankel takes a closer look at pay-TV's OTT shift. Special Report
Programmers are suddenly willing to play ball with OTT insurgents and are conceding to pared-down bundles targeted to millennials. But is their desperation a good thing?
With Dish Network and Sony still working out the nitty-gritty content details of their respective over-the-top TV services, AT&T made its own grab for cable-wary cord-cutters and cord-nevers, announcing a $40 U-verse introductory package that offers broadband, a slimmed-down cable package, HBO and Amazon Prime membership. The caveat? The deal lasts just one year, after which subscribers must take a higher-priced, traditional IPTV bundle.
A report by consumer data company Experian shows a direct link between the availability of over-the-top content such as Netflix and an increase in consumers cutting the cable cord.
Video subscriber growth for traditional pay-TV distributors may be a thing of the past, and "cord nevers," or young people who have never subscribed and don't plan to start, are part of the reason.
Cord-cutting is only attractive if there's lots of quality content and it's not expensive. Both of those factors could be going away soon--or at lease be substantially diminished--according to Darren Feher, CEO of Conviva, who expects that higher fees and less content will become the norm as the online video space finds its footing.
Over-the-top (OTT) video offerings, a stagnant economy and ongoing and new competition from outside sources such as IPTV players are combining to hammer the cable industry's subscriber base, the most recent Television Intelligence Report from IHS Screen Digest found.
There are 11 million broadband households in the United States comprised of cord cutters and cord nevers who do not subscribe to pay TV services. This group, lumped together as "pay TV refugees," now makes up about 13 percent of the entire U.S. broadband household universe.