Not even a week after my post about big conference television contracts ignoring the effects of the Web comes these findings from an ESPN report on the effect of “Cord Cutting”.
Cord Cutting refers to consumers who have jettisoned their cable or satellite paid TV contracts to go “Web-only” for their television needs. And ESPN was only too happy to report that just 0.11% of all cable households have cut the cord.
But GigaOm’s Ryan Lawler takes a closer look. Lawler points out that even at 0.11% it’s already costing ESPN $1.3 million per month.
There are a couple caveats to interpreting the data ESPN released. For starters, there’s the obvious bias that ESPN would want to paint an overly rosy outlook for it’s core business. Lawler notes that ESPN used Nielsen TV ratings data, which in July released another study to “debunk the myth of cord cutting” just before other research confirmed that cord cutting was, in fact, becoming a reality. SNL research showed the first-ever decline in pay TV subscriptions in August of this year.
Now, I’m not sure if execs at the sports programming giant really believe the numbers they put out, or if they’re simply hoping the figures are accurate. Either way, the presumption that it’s performed a definitive study that has proven cord cutting is moot is a little over the top itself.
Cable providers certainly believes it’s real and are looking at combating cord cutting by creating low-cost channel bundles that do not include ESPN, which effectively prices itself out of a “low cost” option at $4 per subscriber. Per Lawler:
It’s one thing for subscribers to jettison their cable packages; it’s a whole other thing for its distribution partners to not include ESPN in cable packages as a way to save their own butts.
But the bigger and more important caveat is that we are way, way early in the adoption cycle of Web-based TV. I’m as early as an early-adopter could be and I haven’t considered doing it yet, mostly because of sports packages like NFL Sunday Ticket, NBA League Pass but also because channels like HBO and the Food Network aren’t easily available via the Web on my big screen yet.
But that’s simply because we are simply early in the product lifecycle. Google TV has been out for about a month now and Boxee is still in Beta. Both products need plenty of work before they are ready for the masses.
So when the content I want is readily available and the products are more mature and that 0.11% turns into a more tangible number, how much will ESPN be losing per month then?
So let’s go back to the easy-perspective setting fact that YouTube is only six years old. Where will we be in five years? Not sure, but I’d bet money I won’t be a pay TV subscriber. As College conferences sign away their television rights for a decade or longer, they may think they are creating financial security when they may actually be sealing their own fate.