Cord-Cutters: Why Do They Do It?

By Ron Hendrickson - Why do people cut the pay TV cord? According to eMarketer, cost is the biggest reason. The research house says a ...

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The research house says a survey from Salesforce indicated that 56% of U.S. Internet users surveyed said they have cut the cord because it's too expensive, followed by technical issues (32%) and poor customer service (23%). Other reasons included unclear billing, lack of quality content, and complex and unclear pricing. Separate research from TVfreedom and The Harris Poll indicated that 86% of Internet users surveyed either strongly agreed (61%) or somewhat agreed (25%) that pay TV is too expensive.

Interestingly, eMarketer makes no mention of the impact of over-the-top (OTT) video, which is readily available online either free or at low cost. Granted, some people just don't watch video, but not very many, so the rest of the cord-cutters must be getting their video from somewhere, and that "somewhere" most likely is OTT, plus regular over-the-air broadcast.

The exact extent of OTT's impact on cord-cutting is a matter of some debate. Some research houses, such as Nielsen and the Diffusion Group, believe it has little effect, while others such as IHS believe it has a major impact.

A related concern is "cord-shaving," where pay TV subscribers stay with their provider, but downgrade from expensive video packages to cheaper ones, again as a consumer cost-cutting move. Some research houses, including SNL Kagan and the Leichtman Research Group, deem cord-shaving a far larger threat to pay TV operators' bottom lines than outright cord-cutting. Regardless, cord-cutting is on the rise, with Parks Associates reporting in October that 10% of U.S. broadband users had cut the cord.

Pay TV providers are well aware of the cost problem, and some such as Cablevision (NYSE:CVC) and Verizon (NYSE:VZ) have tried offering less expensive "skinny bundles" in an effort to keep cost-conscious video subs, with mixed results.

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