Cable TV, satellite and IPTV trounce cord-cutting

Joseph O'Halloran | 01-12-2010

Even though OTT and other online video and alternatives to standard subscriptions services are undoubtedly gaining traction, there is little evidence in the US at least that mainstream viewers are embarking on cord-cutting en masse and dumping traditional TV and further support for this comes in the latest annual study of consumer video consumption habits and platforms conducted by Frank N. Magid Associates.

In the study, ‘2010: The New Age of Video Entertainment’, the analyst believes that customer behaviour should prompt the industry to review any notion that it should gear for cord-cutting in the short term. In fact its shows that despite having available a huge wide variety of digital TV alternatives to cable TV, satellite TV and even telco provided IPTV—such as OTT video, VOD and mobile TV and mobile video services—the vast majority intends to stick with what they have.

Cord-cutting was certainly not being practiced widely if at all: only a single percentage of the survey had cancelled their subscription service in favour of accessing content available on the Internet. Going forward, a mere 3% were only at the stage of considering cancelling their traditional subscriptions without replacing it with a competing subscription. Only 2.5% actually used Internet-based TV content exclusively.

Even as iPads and other devices ideal for watching OTT and mobile video services fly off shelves, providers of such services may be disheartened to be told that, despite heavy marketing, only a tenth of the survey actually showed an interest in trying to experience films and TV programmes from the Internet to a computer or tablet screen. In stark contrast, Magid revealed that ‘surges’ when viewers were asked about viewing this content on a TV screen via a computer connected to the Internet. Interest also climbed even more when people were asked about devices such as Apple TV and Roku.

Yet a fundamental paradox exists, which could still shape the TV industry for some time to come: those consumers using the greatest number of alternative platforms also tend to spend the most money on traditional subscription services. This prompts Magid to conclude that alternative video viewing platforms should be considered not as replacement devices but as complements to traditional subscription TV. Furthermore, what the analyst said was at most risk from the growth in use of alternative video viewing platforms was not traditional TV but instead the purchase and rental of DVDs.

"The average American's capacity to consume video content is impressive," said Maryann Baldwin, Vice President of Magid Media Futures, explaining the research.

"As new video viewing platforms such as instant streaming and mobile apps proliferate, consumers are simply adding them to their portfolio of video viewing options. Our research indicates that this is definitely not a zero-sum game -- at least at this point, it appears that traditional subscription services and alternative viewing platforms can coexist with services like 'TV Everywhere' locking in revenues for traditional providers."