“Cutting the cord” sounds like it could be some type of surgical procedure, but really it’s slang for getting rid of your subscription TV service. However, like surgery, “cutting the cord” could be painful and not without certain risks. But relax, let BrightReviews guide you through the process so you know exactly what you are in for.
Part One: Why Cut Your Cord?
In a sense, cable is an essential staple of American TV. It has been around in some form or another since at least 1948, when it was used to help over-the-air television stations reach remote areas that couldn’t receive the analog signal. But it wasn’t until 1975 when HBO became available nationwide by satellite and 1976 when Ted Turner’s WTCG came on the air, that there began to be a separate television service that would charge a monthly fee for access.
Of course, since that time there has been an explosion in channels and content. As of 2015, the top players in this game are Comcast (22,375,000 subscribers), DirectTV (20,412,000), DISH (13,844,000), and Time Warner 11,025,000). There were an estimated 900 channels offered in 2014.
That’s a lot of channel surfing!
However, all these channels and premiums are not without cost – cable companies are said to have spent almost $307 billion in programming since 1996. This has been passed onto the consumer in the form of ever-rising subscription prices and bundled packages that many complain are overpriced, containing channels they do not want. An average basic cable subscription currently runs $54.92 per month and is expected to rise to $61.76 by 2018.
Rise of the Cord Cutters
But as broadband Internet has become more prevalent allowing the transmission of video, upstart “rebel” services like Netflix, Hulu, and others have attempted to disrupt the traditional cable model and change the way entertainment is consumed. Smart TVs with a WIFI connection and portable devices like smartphones and tablets have also fueled the demand for digital video.
They appear to be winning, or at least gaining a strong foothold: in 2013 the number of cable subscriptions fell by a quarter million the first full-year decline ever reported, noted Bloomberg News. However, they added that the entire pay-TV industry is still huge at approximately 100 million people.
And while these so-called “cord cutters” may still be relatively small, they have banded together and created a very vocal minority that see these cable companies as greedy monsters, robbing them of choice when it comes to what they want to watch, where, and when.
Is Cord Cutting a Good Thing?
If you listen to the cable/satellite/broadband subscription providers, the answer to that question is a resounding “no”. The reason the cable bills are so expensive is not their fault, they claim. They must pay expensive fees to carry more popular channels like ESPN and if they didn’t bundle so many channels together and offered more a la carte options, some of your favorite channels/shows would become prohibitively expensive to operate and potentially cease to exist.
It could also be argued that given the number of channels provided, including live sporting events and niche programming, it’s a relative bargain compared to say, a cellular phone – the average cell phone bill is estimated at $71 and contains essentially NO entertainment content.
Still, something clearly needs to be done to make everyone happy, but the answers are difficult and unclear at the moment. HBO and Showtime have recently broken from the cable mold and have begun offering Internet-based services. Even the pay-TV behemoths themselves are getting into the act. For example Sling TV is a service that proclaims to “liberate” you from an expensive cable package, but it’s secretly run by Dish Networks.
Cutting the Cord… and the HEAD?
As we were writing this article, news arrived about the latest blow to the traditional pay-TV model. The Walt Disney Company, considered a stellar money-maker in years past, announced that it would not be as profitable in 2015, because fewer consumers are subscribing to full pay-TV packages. Upon the news, there was a 2-day sell-off of many major media stocks, causing investors to lose $60 billion.
This stock market free fall may be temporary, but it has rattled the industry. These giant companies who once ruled their cable fiefdom are now worth less money, and they may have to cut back on creating more content. This could lead to fewer TV shows, movies, and other events that the Cord Cutters so desperately want (but don’t want to pay for).
And who will take their place? Most of these small startups have little experience in content development. Bigger players like Netflix and Amazon have entered the fray, jump-starting their catalogue by spending billions of dollars (they don’t have) on programming. Even as their stock prices soar, some feel they are over-valued and could eventually collapse.
This could leave everyone that enjoys movies, sports, concerts, and television shows with less choices overall.
Concluding Thoughts on Part One
We don’t want to sound like we’re a shill for Comcast, Dish, or for that matter Disney, Viacom, or Netflix. Content is valuable and yet consumers clearly need – and demand – more choices. There are big changes on the horizon, but they could be a mixed blessing for everyone.
In the next installment, we'll look at the key players in the Cord Battle, examine their “weapons” and expose their “weaknesses”. Stay tuned!