Households Cutting the TV Cable Cord

Nielsen reported February 8, 2012 a dramatic increase in the number of households that are viewing TV without a subscription to cable or satellite - moving to internet exclusively. Program providers (ESPN, etc) have disputed this “cord cutting” phenomenon (any negative impact to viewership hurts advertising revenue) seeing it as merely “cord swapping” to other subscription services. Nielsen is not giving reasons for the increase or even saying what to call it, but the 22.8% increase of internet-only homes (now 5% of total TV households) is starting to confirm fast acceptance.

I view some of my favorite shows online and I can say it is quite easy to do and very convenient. College aged kids have embraced this rather than pay cable fees. While the bigger screen is still needed to get a decent viewing experience, newer flat panel screens are laptop compatible.

Here are some implications for marketers:

1. Advertisers will be more limited in their ability to target messages to local cable markets.
2. The bond between networks, stations and broadcasters, and the role of “time-slot” programming will continue to decline.
3. Online arms of traditional providers (NBC, ESPN etc.) will try to maintain exclusivity of content, which will be very challenging.
4. Video entrepreneurs will post more original content as consumers embrace online video viewing. Music and book publishing has already moved in this direction.

As in other industries, the internet will lead to more programming availability from new content providers.  Creating this new content may be a great opportunity to establish new brands.