“Cut the cord,” the angel on my right shoulder whispered softly in my ear. “Ha! Good luck trying to get all the content you actually like!” laughed the devil on my left shoulder. “Yes, you’ll jump through hoops to get the content you like, or have to buy additional hardware to get it, or wait until the end of a season to download your favorite premium cable shows, but think of all the money you’ll save every month not subsidizing hundreds of channels that you never watch anyway!” the angel replied. “Yeah!” I agreed, convinced that the cost would be worth it. The devil paused, turning back to the conversation with a mouth full of popcorn and snorted, “What’s that? Sorry, I couldn’t hear you over the roar of the crowd at the boxing match you’ll never be able to watch if you cut the cord…”
And that was it. The call went out. The installer came in. The cable came on…and it was back to business as usual.
My dilemma over whether to “cut the cord” came with my recent move to a new city, and it is not unique to me. Increasingly consumers are motivated to cancel their cable subscriptions and get their entertainment from a growing number of providers online. Younger consumers hit hard by the latest recession are looking to find more ways to save . They are more inclined to use streaming services to access content on mobile devices and are the driving force behind the “cut the cord” movement. As subscriptions decline, so does cable’s ability to maintain its ecosystem of content partners.
This is a daunting prospect for cable companies as networks take advantage of decreasing technology and production costs to deliver exclusive content through their own digital distribution platforms. Consumers can choose from an increasing combination of high-quality streaming content providers – Amazon Instant Video, iTunes, Netflix, Hulu Plus – with an expanding list of popular programs. Hardware manufacturers have aggregated streaming services through set-top boxes, gaming consoles, and apps on Internet-enabled TVs. This ensures that access to streaming content in the “10-foot experience” keeps pace with accessibility from mobile devices. Now that time-shifted TV viewing has become common, watching episodes of favorite programming days or weeks after the original airdate isn’t viewed as a negative (TiVo’s greatest invention was the behavioral change it created among TV watchers, not its hardware). The only things standing in the way of consumers and their favorite content are systems designed to create more value for the cable companies than viewers.
Right now, most pay networks are tied to the fortunes of cable providers with paper handcuffs. Cable providers have become the de facto gatekeepers for streaming content from premium channels based on their long-standing contracts with content providers. But as the old saying goes: content is king. Subscribers’ brand loyalty is invested in their favorite shows and networks. Cable providers are the necessary evil they have to deal with to enjoy the entertainment they really want. If that sounds a bit harsh, consider this: in my company’s 2012 Global Brand Simplicity Index, cable providers were ranked 23rd out of 25 among U.S. industries in terms of simplicity. Only the insurance industry was ranked worse. By contrast, the media industry – including TV, Internet, and mobile – was ranked seventh in terms of simplicity. Interestingly, both the media and cable industries fell in the same range of price premium that consumers reported they’d be willing to pay for a simpler experience (5.6 to 6 percent). As the report states, “Simplicity takes courage, but the reward far outweighs the risk.”
In the digital entertainment ecosystem, cable providers’ contracts with the networks (and their reluctance to redesign them to offer à la carte pricing) are often the biggest roadblock between consumers and their favorite entertainment programming. Services like HBO GO, MAX GO, and Showtime Anytime require a cable subscription to watch current episodes of their original series and sports programming (so I can’t watch “Real Time with Bill Maher” or follow the progress of up-and-coming fighters on HBO Boxing). And they only release episodes on the streaming services after a season ends. However, shrinking consumer demand for cable could lead networks to expand relationships with ecosystem partners like Apple, Google, Facebook, and Amazon. These partners could manage subscriptions, generate increased viewership through their sophisticated user analytics and behavioral targeting, and slowly chip away at the walled garden of cable providers.
If a brand is a value delivery system, then there is a golden opportunity for a brand to step into the space and deliver the service that younger, cost-conscious, connected consumers are increasingly seeking. Any brand – whether it’s a streaming service or a cable provider – that can innovate with process rather than product and create a connected experience that opens up the walled garden will fundamentally change the way we view television (similar to what Apple accomplished with iTunes and the music industry). The shift has already begun. Stay tuned.
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