Already heated tempers reached a boiling point last week in the current mêlée between Fox's parent company, News Corporation
and New York-based Cablevision
. At issue is the question of "retransmission," the fees cable companies must pay networks to carry their programming in the line-up.
In the latest salvo, News Corp elected to deploy a "nuclear option" of sorts--blacking out not just Fox channels, but also Cablevision subscriber access to sites such as fox.com
. The access blocking, while short-lived, sent a clear message-Fox holds the cards. Was this move a shot across the bow of `traditional' cable, as some have suggested, or rather a shot in the foot for News Corp?
This Whole ‘Cord Cutting’ Thing? Yeah, it’s Here to Stay
Dismissing or minimizing the severity of cord cutting has been de rigeur
of late in the analyst community. Many service providers and industry pundits alike have effectively buried their heads in the sand for the past 18 months over the issue, writing it off as “over hyped phenomenon.”
we just fielded suggests that doubters might want to rethink their position. According to the survey of 2,000 Americans in late Q3’10, 13% intend to drop their pay TV subscription in the upcoming year
—and not replace it with another one.
We have long held that cord cutting
is a very real problem, and what we’re seeing now is likely just the tip of iceberg. What happens when today’s teenagers start controlling the pocket strings in five or ten years?
120 Channels and Nothing On
The average US household receives nearly 120 channels, though many would argue that they watch only a handful of those. Our survey found that, when asked to rank their five "must have" channels, Pay TV consumers chose the four "free networks" (CBS, ABC, NBC, FOX) as the top slots. ESPN rounded out the top 5.
This is rather astonishing, and adds further credence to the notion of cord cutting. After all, if four of the top five channels an individual watches are available for free (either online or over the air), why on earth would one pay upwards of $70/month for a subscription? Force of habit? Because the cable company told you to? To avoid having to switch an “input” button on the remote control?
Not the End for Pay TV—But Maybe Pay TV As We Know It
To be clear, we are in no way predicting the imminent demise of pay TV. There will always be a market for premium content, and that customers will continue to be receptive to paying for content relevant to them. Rather, we believe that service providers must rethink business models.
Some have already begun to do this, through initiatives like TV Everywhere
That, however, solves only the where
part of the problem. Next to tackle is the what.
A la carte?