Premium channels axed as pay-TV operators face challenge of cord-thinning, cord-cheating

Joseph O'Halloran | 06-12-2013

For the last few years the concept of cord-cutting has been one of great contention yet new research from Digitalsmiths has shown that pay-TV operators should be more aware of what is being described as cord-thinning.

The analyst’s quarterly round-up of trends in the media/entertainment industry found in general positive news in Q32013 with 16.9% of pay-TV subscribers removing or decreasing services in what is now being called cord-thinning. This represented a slight rise on the 14% and 13.4% of the preceding two quarters.

Yet even though only 2.9% of respondents plan to cut their cable/satellite service in the next six months, a slight decrease from Q2 results, 6.9% still planned to change providers and 2% planning to switch to a third-party app or service. An alarming 34% answered “maybe” when asked if they would make a change.

Of the services thinned, “reduced level of cable/satellite service” increased the most to 45.2%, but Digitalsmiths notes that it saw a consistent trend of premium channels as the highest ranking service cut.

Though premium channels were being axed, the still remained the top ranked services added, with HBO the leading provider. Moreover, of the 17.2% of consumers who increased their cable/satellite services, premium sports packages saw a quarter by quarter leap almost certainly driven by the onset of the NFL season.

Despite its warning, Digitalsmiths also indicated the potential for pay-TV pointing out that nearly two-thirds (62.7%) of respondents do not pay for premium channels and a larger audience does not pay for sports packages.

The analyst also saw the growth of cord-cheating whereby consumers seek on-demand video content from third-party services and over the top (OTT) services as an alternative to their traditional pay-TV provider. One example is the use of Netflix on cable packages.

In a call to action, Digitalsmiths said the real question pay-TV providers need to focus on is why consumers are looking elsewhere for their video needs and that they needed to focus on user convenience, cheaper options for consumers and the ability to watch content on connected devices.