Cable Cord ‘Frayers’ Could Mean Billions in Losses31 Oct, 2012 By: Doug McPherson
LIVONIA, Mich. – You’ve likely heard of “cord cutting” – when TV viewers cancel their paid TV services. Now there’s “cord fraying” – downgrading pay TV subscriptions and decreasing pay-per-view usage fueled, of course, by the economic downturn and now spreading like wildfire because of easy to get and use technological advances.
Now a national study by Market Strategies International says the biggest consumers of video are the most likely to limit their paid TV viewing and subscriptions. These cost-conscious and technologically savvy “cord-fraying” consumers are becoming more targeted in their video-viewing habits, potentially costing cable operators billions of dollars per year in lost revenues.
“These technologies are simple to use, so few cord frayers return to their previous viewing habits,” said Randall Hula, vice president of communications at Market Strategies.
He added that cord frayers are consuming video through tablets, smartphones and computers rather than their televisions, and are more likely to use a Blu-Ray player and services such as Hulu, Netflix and Amazon Prime to view movies, TV series and children’s programming.
“The consistent themes among cord frayers are that they are video-heavy and technologically savvy consumers who are choosing products and services that allow them to view the content they want, when and where they want it,” said Hula. “These are exactly the people who, in the past, drove the cable industry’s PPV and premium channel revenues, and they’re being lost to new ways to view.”
The average cord frayer surveyed by Market Strategies reported a $42 monthly savings on their cable bills by cancelling and/or downgrading subscriptions and decreasing PPV usage. As alternatives become more ubiquitous and even easier to use, the potential exists for cord fraying to become more widespread, costing cable operators billions in annual revenues.
“Cord frayers are dissatisfied with their cable companies and can now do business with those companies on their own terms,” said Hula. “Cable providers are hanging on to a portion of cord frayers’ business thanks to some content that consumers can’t get anywhere else, but the revenue these customers are taking elsewhere is overwhelming.”