Some 30% of households using pay-TV services are at risk of cutting the cord altogether in favor of Internet-only alternatives like Netflix, Hulu Plus, Amazon Instant Video and others from a variety of devices that are already in the home, from game consoles and Blu-ray players to smart TVs and STBs.
That 30% figure comes from In-Stat who said that pay-TV subscriptions only had a 0.15% increase (148,000 subscriptions) in 2010, but also noted consumers are ever more willing to access video and related content through alternative means.
Neither age nor income impacted cord cutting, according to In-Stat. Nielsen however, says consumers under the age of 25 are twice as likely to snip it. Surprisingly, in 2010, more households added premium channels than dropped them. Another major surprise was that consumers valued cable sports significantly less than on-demand access to TV content or premium TV channels — this means that more sports won’t stop cord cutting, but more VOD and perhaps more TV everywhere will.
“A substantial portion of pay-TV subscribers exhibit similar characteristics to video cord cutting households,” said In-Stat. “It is important to track these ‘at risk’ subscribers, rather than the pay-TV subscriber base as a whole. In general, our new data confirms that adoption of online video is growing.”
With these new numbers, it’s easy to say that every CE company and every content service should have someone working on a smart TV offering. Consumers care about VOD more than sports, a notion that is a bit mind boggling as even we have carried the banner that proclaimed ‘Sports Will Save Pay-TV!’
The problem with that old banner is twofold: 1) sports are migrating away from being pay-TV-only and moving to smart services, especially on STBs like those from Roku and Boxee; 2) a Web service that provides VOD content gives the user something compelling to watch instead of sports.
Quick, think of a broadcast TV show that comes on the same time as NFL Monday Night Football that you’d rather watch. Expanding the list of TV show choices to anything from the past 20 years makes it much easier to pick something instead of football. Expand the list further to any movie from the past 50 years and it gets even easier to pick something beyond the pigskin. If you’re a baseball, basketball or soccer fan, there’s a chance you can catch that game at any time or at least without a dedicated pay-TV channel.
Services offering such a selection are making their way across the Web and are now expanding into more and more living room devices. Smart devices have moved past a PC hooked up to a computer or a few STBs and now include almost every available TV set, game console, home theater and any piece of CE that can play a Blu-ray disc.
Now that this content is becoming readily available in an “anytime, anywhere” manner, there are more and more new opportunities popping up for services and content offerings. For recommendation and information services, there is a big opportunity for jumping on to a peripheral like a tablet that can use its microphone to detect what content is played. Content providers can develop apps for a wide variety of platforms. Advertisers can work on the interplay between TV sets and mobiles, giving users a quick way to buy something or see more of an ad on a companion device so as to not take away from the regular viewing experience.
The market for smart TVs is projected to expand beyond traditional TV offerings, and in the next three to five years projections put a smart TV in every home in the developed world. All of these devices will need new hardware, new software and new content. Thanks to the innovating controls coming from the Microsoft Xbox and Nintendo’s Wii, we also know that a whole new range of uses can come to the next generation of smart devices.
Even if the pay-TV companies lose some users to cord shaving and cutting, all of these new services will require faster and faster broadband speeds to facilitate quick and quality viewing.
From voice commands and gaming to ordering a pizza and a movie or looking at medical records, there are almost no limits to what the coming wave of smart devices can provide access to. Smart TVs and adapters that make older models smart are going to make the TV set the most engaging and interactive experience in the home, and future projections all say users will consume more and more media including TV time.
It’s the potential of these devices and of their companions that make us at The Online Reporter think every company, no matter how big or small, should have people working in the smart living room department.