Behind the growing
urge to cut the cord
Study: 7 percent have already dropped their cable or satellite
By Diego Vasquez
Sep 1, 2011
Everyone in media agrees that cord cutting has become a big-buzz topic in recent months, with cable subscriptions dropping for the first time and more free online video content available than ever before. The thing no one quite seems to agree on is how immediate the threat of cord cutting really is because it's such a new concept. Now a study from OMD finds that cord cutting could become more prevalent more quickly than many had thought as video viewing from non-traditional sources sees a huge bump. The study finds that already 7 percent of respondents have cut their cable or satellite subscriptions, and another 17 percent say they'd be willing to. At a time when people are looking to save money on their bills as the economic recovery drags on, that's a significant percentage. Online, mobile or tablet viewing offer two significant advantages over traditional TV viewership: fewer commercials and the ability to time shift. Media people will be watching closely to see if those who are mulling a cord cut actually follow through. Robert D'Asaro, U.S. director of digital strategic alliances at OMD, talks to Media Life about cutting the cord, how online video consumption is changing, and why DVRs are actually somewhat limiting.
What did you find most interesting or most surprising about this report?
In terms of most interesting or surprising, for the most part the report validated our assumptions versus shocking us. If there was any one thing that was a bit shocking, the one surprising number that came out of the report was that 7 percent of people have already cut the cord, and I think another 17 percent would be willing to.
Nielsen came out a couple months ago said a small segment of the population was going without TV, but seeing the results of this report lent a lot of credence to that. TV is the biggest media marketplace, and if 7 percent has already cut the cord, that's significant. And if another 17 percent are willing to, then you're talking about 24 percent of the population completely stepping away from traditional broadcast TV, and that's significant shift in the marketplace.
What is the most important thing that media buyers and planners can take from it?
I think there's actually a ton of stuff.
Most is stuff we've been talking about for a while, but probably the most important thing is streaming is not one size fits all; it's used for a multitude of reasons. We usually do a classification of three: broadcast--which means it's been on air; professional--while it may not have been on air, it's a professional production; and then user-generated content.
And I think one thing this study brought out is that's definitely an over-simplification of the marketplace. As you get deeper into it, the fact that it's not those standard demo breakdowns, people are using it in so many different ways. No matter what audience or what group of folks you're looking to target, there's a use for this.
Why do 18-49s make up a larger proportion of online video vs. TV audience, and what does that tell us about their video media consumption?
If you think about this group, especially on the lower end of it, this is a group that's really grown up with the internet and digital. They have the expectation that they can find the content when and where they want it.
So I don’t think it's surprising the younger group is early adopters. It says they don’t necessarily see it as TV versus a laptop versus a mobile phone, to them it's really all content, and it's really what's most convenient for them.
Did you find it at all surprising that more people accessed video content via computers than DVRs? Why is that?
We weren't surprised at all, we've seen those numbers. One reason for it is just penetration. If you think about the penetration of smartphones, tablets and PCs combined, they well dwarf the penetration of DVRs.
It also gets to a matter of convenience. The only place you can watch a DVR'd show, right now anyway, is through your TV at home. Whereas with other devices it's content when and where you want it.
How has the rate of streaming video watching changed over the past few years? How long until most people are watching video at least once a day, and what does that mean for advertisers?
The growth has been quite explosive. I think you're seeing somewhat of a leveling off right now. Right now it's about 80 percent of the web population, and if you think about it web video has gone from 0 to 80 percent in about five years, so it's been explosive growth.
One of the reasons for a great leap was the amount of broadcast or professional content that came online, the introduction of full episodes. It took the path of almost any medium you think of. At the beginning it was young males that were early adopters, and it was that way for a year or two, but then with the introduction of Hulu and broadcasters putting their content online, that's when it really took off. It went from 70-30 male-female to almost a complete mirror of the broadcast TV audience.
For a long time, and by a long time I mean four or five years, we've preached a consumer-centric approach and really talked about video being video. What the real meaning for advertisers is is you can't ignore the space, and you can't stick to what is the current recognized business model.
You have to think about what it means when someone is watching a full episode on a tablet with maybe four commercials, versus when they're watching on TV.
Sixty-five percent of respondents say that streaming video is not seen as an adequate replacement for cable/satellite TV. Does that mean that worries about cord cutting are perhaps overblown?
You know, it's funny because it's sort of a different cord if you think about it this way.
Most folks who are watching this stuff are doing so over a Wi-Fi connection that's coming from the same cable or satellite provider. So it's not so much cutting the cord as putting the cord through a different pipe. Almost every HDTV that's sold right now has some sort of internet connection, so in three or five years there won't be much difference between turning on your TV and flipping channels now and from flipping from NBC to Hulu to Fox, etc.
The younger demos don't think about broadcast versus cable versus streaming, it all just becomes content.
Why are weather and news so popular for streaming video?
I think it's somewhat common sense if you think about it. They're really the two things that are universal, and they're also short, quick and timely. The two things that are immediate and relevant are weather and news. Short clips, viewable anywhere and timely.
The one thing coming out of this that's a bit surprising is that full-length TV programs were the next most frequently viewed, more than music videos or UGC or really anything else.
If you would have asked that question three to four years ago it would have been different--there's been a dynamic shift in the content folks are viewing.
What are the primary drivers for watching video content and why?
The easiest answer is for entertainment. Which just sort of makes sense because that cuts across every category you could think of.
But it really is all about convenience. I can watch whenever I want and wherever I want. The one thing that comes out here that advertisers have to think about is 37 percent say they do it because it's easier to avoid commercials. I think a lot of folks right now are thinking about how to monetize this, and it's something folks will continue to struggle with over the next few years.
What are the main barriers to watching video content and why?
If you go through most of what was in the study, what you can boil it down to is a lot of folks don’t think the technology is there right now.
Twenty percent say screen size is too small. Another 20 percent say content freezes and stalls. As technology catches up you'll see a change here--I don't think there will be much of a difference between current cable and satellite and streaming. That's the biggest barrier that we saw.
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