The Impending move to Cord-Cutting signals massive Revenue Shift for TV

In the next 12 months, the concept of cord-cutting is going to really take hold — a huge opportunity for television companies, as they continue the shift to become digital-first and look to replace revenues lost from the traditional cable consumer.

Until now, cord-cutters were digital natives with no ties to standard television: younger, mobile-oriented consumers, many of whom had yet to lay down roots anywhere and were in the early stages of their careers, where income and continuity can almost be considered a luxury.   The tipping point is approaching, however, as customers now have more options allowing them to untether from traditional cable companies.  Products like Apple TV and the rumored Apple television subscription service are making headlines, as well as stand-alone offerings from HBO, CBS, Hulu and more.  Meanwhile, Netflix and others create digital-only content that rivals anything produced by the traditional networks.  The general mass audience is intrigued by not being tied to a cable subscription, which can cost from $100-$250 per month range.  This is not a small amount of money, and many people would love to eliminate that cost.

For me, cord-cutting depends on three things.  First, I need access to local TV, primarily for local sports.  Second, I need access to ESPN on digital devices, but not tied to a cable subscription like the current Watch ESPN app.  Third, my wife needs HGTV and all the “house-hunting” shows it broadcasts.  For my family, this would pretty much take care of things. If I could access all these online, the cord would be cut tomorrow.  

According to my my recent informal polls, my family exemplifies a number of other households. With the exception of a few cable channels, I’d say most consumers in the 25-49 demo, a valuable demo for advertisers, are ready to make the switch. That means cable companies are teetering on the brink of a ton of lost revenue, which is why the convergence of digital and TV is so inevitable. Cable companies are going to have to find ways to replace all that lost subscription revenue somehow — and they have to address this problem quickly!  Digital advertising comes to mind, along with app subscriptions and other, more innovative ideas.

Overall TV viewership is still increasing, but one would argue it’s because of the confluence of channels and devices enabling viewership.  Still, while viewership may be increasing slightly, the shift in format means a loss of revenues.  It’s less expensive for me as a consumer to subscribe to two to five core stations for my viewing, than it is to subscribe to cable.  The net-net is similar to that in the media targeting world: similar content, but less waste.  I don’t need to pay for the other 250 stations if I only watch three to five of them!

While the availability of many options used to be a strong selling proposition for cable, it is holding less and less value for time-starved consumers, who barely makes it through the week multitasking as it is.  As a full-time parent and full-time member of the workforce, I find watching TV at home is a luxury I seldom indulge.  TV is something I watch on airplanes and on the train to or from the office.  Sitting around at home and watching TV on the couch is a thing of the past; the only appointment viewing I have left is for sports events, a rare occurrence.

The TV industry is going to start trying new initiatives to get that revenue recovery underway.  This is why most people believe that digital media won’t surpass TV, but instead, digital media will simply merge with TV into a single, multichannel, video experience.

Are you ready to cut the cord?  What’s holding you back?

By Cory Treffiletti
Cory, vice president of strategy for the Oracle Marketing Cloud, is a founder, author, marketer & evangelist.
Courtesy of mediapost