If you make money charging people for TV access, here’s the latest set of scary numbers. A new Pew Research Center report has found that one out of five young adults between 18 and 29 say they have “severed the ties they once had with cable or satellite service.” They’ve cut the cord. They used to pay every month for a TV package, and now they don’t. That’s startling. It’s even more startling than this other scary number: 16% of young adults say they’ve never, ever paid for cable or satellite TV.
Overall, 24 percent of adults say they don’t pay for cable or satellite. Again, remarkably, 15 percent say they’ve canceled service.
Why is that one-in-five-young-adults-have-severed-ties number so stunning? Once a corporation gets a consumer to sign up for a monthly anything, it’s pretty hard to get them to cancel. Witness the 2 million or so Americans who are still paying for AOL dial-up service. Habits die hard — automatic payments die even harder. You have to really, really piss people off to get them to cancel a service.
Never doubt the ability of pay TV to piss off people, I guess. Firms like Comcast and Time Warner continually show up on lists of bad companies with bad service, even as prices continue to rise. I recently saw a consumer with a (gulp) $400-plus monthly Comcast bill. I promise you that family will not be donating nearly $5,000 every year to Comcast much longer. (Amazingly, the firm was bickering with the woman over a few fees in the $50 range. Talk about short-sighted).
If anyone needs a refresher in Aesop, it’s the pay TV industry. The golden geese are being slaughtered.
Don’t miss this important detail about Pew’s research. In today’s binge-watching, stay-at-home-because-the-beer-is-cheaper, I-can-use-my-parents’-login world, it’s no surprise many young people have never signed up for pay TV. Delayed household formation is impacting every industry. But that’s not what we’re talking about here. Many of those folks will eventually settle down and start buying homes, couches, silverware, and yes, some kind of TV service.
Here, we’re talking about young people who used to pay for cable/satellite, and don’t any longer. They aren’t coming back. At least not without some incredible enticements.
All this has a lot to do with Comcast’s new experiment with data caps for home broadband service. Of course. Unlimited home bandwidth is one factor killing off pay TV. About two-thirds of cord-cutters told Pew they don’t pay for TV because they can watch everything they want to watch over the Internet. With metered Internet service, that will become more expensive. There is some calculus by which it’ll be cheaper to pay for cable TV than stream all those shows over metered broadband. That calculus sounds awfully anti-competitive, so you won’t see broadband providers make dramatic leaps in this direction, just careful sorties.
But pay TV execs take note: The No. 1 reason people don’t pay is because pay TV is too expensive. Rather than degrade broadband service to win back consumers, how about offering better value instead? It’s already happening in some parts of the country. The newest rage in pay TV is called “cord shaving.” Disgruntled consumers aren’t cutting the cord entirely, but opting for very, very slimmed down packages that cost $30 or less (also called “skinny” TV).
Why cable firms wouldn’t fall over themselves to turn cord-cutters into cord shavers — so they at least maintain some kind of financial relationship with consumers — I can’t imagine. But they’d better figure it out soon, or they’ll miss out on entire generation of consumers.
Actually, I can imagine why, because it happens to old, entrenched companies all the time. It’s a phenomenon we covered extensively in our book The Plateau Effect. Old companies go blind.
Consumers aren’t just leaving pay TV. They are thrilled to leave pay TV. Watch consumers’ Facebook updates. Cutting the cord is practically the new mortgage burning ceremony. People loved Netflix mainly because they hated Blockbuster so much. People like Uber because they hate yellow cabs. What executives of incumbent firms miss often is how happy consumers are to “fire” the incumbent. Right now, cutting the cord isn’t just sensible because it’s cheaper. It’s an act of rebellion. It’s hip. It’s smart. But most of all, it feels good. It’s something you brag about at holiday parties.
And, critically, it’s like breaking up with a bad boyfriend or girlfriend. You just don’t miss cable when it’s gone.
Pay TV better start buying consumers chocolates or flowers soon. Better yet, it should really spend some time working on itself, maybe go to therapy, or at least read a few good relationship books. Then maybe consumers might consider giving it a second chance.