The Fable Of The TV Cord Cutter (Part 3 of Many)

If you hadn’t noticed, the blogosphere and the trade press are awash in TV cord cutting articles and posts this week. As expected, the “media” have picked up on this topic and made it one of the most emotional marketing stories in a long time. More emotional than “people love Apple.”

Fair disclosure first: I’ve spent about 20% of my time the past 18 months working on various marketing projects with a cable/satellite company. Having said that, I couldn’t care less what happens to them – I don’t have enough skin in their game. But it has given me a perspective that isn’t based on emotion.

The emotion I refer to, of course, is the hatred for cable companies – perennial last-place rankers in any poll of customer service, satisfaction, etc. They are as hated as lawyers and the NYC MTA.

No one believes the cablers explanation for their subscriber losses last quarter, the first time the industry has had negative growth overall. The cable companies say it isn’t cord cutting. By and large, I believe them.

There are two major factors to consider. The first is the government-mandated transition last spring and summer to move everyone to a digital video signal. Remember the $40 rebate coupons for a set-top box your grandparents had to get? Now it’s a year later, and lots of people who used to pay $0 for analog antenna reception have rolled off a $40 a month subscription and, of course, don’t see any value in it. MTV Head Bangers Ball isn’t something they are dying to see.

The second factor is the economy. To get cable, you need something special – a place to live. The rate of household formation has been cut in half this year. That takes about 500,000 homes out of the cable company equation, which coincidentally, is near the net loss of subscribers reported.

In addition, thousands of homes continue to go into abandonment and foreclosure. Hard to get people to sign up for cable there.

Ironically, the GigaOM technology website is running a series on how to cord cut. The current feature shows you how to use a $12 antenna to get an over-the-air signal. Just like we did in 1965. Great suggestion guys.

Tomorrow, we’ll look at a couple of companies who are working with 21st century technology to make money off cord cutting.

One of them failed miserably, and is already out of business. But it didn’t get the abuse cable and satellite companies get. No one seemed to notice at all.