Paid content.org posted this interesting piece in which Barclay’s analyst Anthony DiClemente argues that because Pay TV cord cutting drives up the cost of broadband in the cable bundle, it doesn’t save consumers enough to be worth sacrificing cable content when they opt instead for OTT video. What DiClemente may have overlooked in this argument is that the cord-cutting isn’t about savings so much as choice, mobility, and user experience.
There are several problems with Cable or traditional Pay TV services:
1- Linear TV is outmoded. The way forward is on-demand. Even though DVR service provides an experience that’s similar to on-demand, it still only records linear TV for more convenient viewing. Real on-demand access to a large video library costs extra and can be nearly, as, or more expensive per-play as is a service like Netflix.
2- Pay TV includes a lot of junk. With a Pay TV subscription, you get a lot of what you don’t want. Then you pay premiums for the programming and services you really want. Plus, you have to surf through the stuff you never watch to find the stuff you prefer. OTT video eliminates that. Sure, Netflix has a load of garbage content, but it’s easy to ignore and navigate around in order to access the stuff you like.
3- Fixed line broadband isn’t mobile. If I cut the cord and keep cable or telco broadband, then I’m the sucker. With 4G wireless broadband going for $50/month unlimited, I can bring my Netflix with me, on my iPad or PC, anywhere I go that I get either 4G or free WiFi coverage. Pay TV doesn’t give me that mobility; some TV Everywhere offerings do, but it usually doesn’t come with basic TV. DirecTV, for example, requires the customer to have an HD, connected, streaming-capable DVR set-top to access its TVE service. That’s a hefty monthly bill just to give me what Netflix gives me for about $8/month.
If Pay TV providers think as DiClemente may suggest here – that price per programming is the issue – then the industry is misguided. Choice, mobility, and user experience – and the value they provide collectively – are what are changing the direct-to-consumer video landscape. If you can get all of that, and still save a few bucks per month in the process, you win. Together, that more than justifies cutting the cord.