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Cord Cutting and The Future of Television

Industry pundits predicted that, by now, traditional television would have perished. Like the music industry, which has been irrevocably changed by the likes of iTunes and Spotify, television viewers were supposed to have moved to online alternatives – citing high costs, an abundance of low-quality or niche content, and atrocious customer service as the reasons. But this hasn’t happened. Why? And what does the future hold for television?

By now, cord-cutting was supposed to have decimated traditional cable and networking television, with viewers choosing instead to spend their time and money on on-demand services such as YouTube, Netflix, and Hulu. But, whilst it’s true that the use of on-demand services (particularly SVOD) is increasing amongst all demographics (especially Millennials), only around 1 percent of Americans are cutting the cord each year.

One reason for this is that, though the use of on-demand services is increasing across all demographics, certain demographics are taking longer to embrace them than others.

The older generations, for whom network and cable television have long been a staple part of life, may not yet feel entirely comfortable with on-demand services – indeed, this appears to be reflected in the figures, with Gen Xers (35-49), adults aged 50-64, and adults aged 65 and older still watching a significant amount of television (32 hours a week, 44 hours a week, and 53 hours a week respectively) though dedicating substantially less time than their younger counterparts to on-demand offerings. Since these people make up a significant portion of population, their reluctance to give up traditional television is perhaps the most significant factor in keeping the industry alive.

But this situation can’t continue. Americans (many of whom have both cable and one or more SVOD subscriptions) are currently paying more for television services than ever before. Millennials have already proven their willingness to cut the cord; indeed, many already have. So increasing the fees for cable, which has been happening for years, will only burden the industry’s most loyal customers – those older generations. This means that, eventually, those expensive 200 plus cable bundles are going to seem far less attractive, especially as these generations get more comfortable with SVOD and VOD offerings.

At the same time, Amazon, YouTube, Hulu, Fox, and NBC Universal are all negotiating to offer live television over the internet by the end of the year or early next year. Their ambition is to offer America’s major broadcast networks as well as many popular sports and entertainment channels at a far cheaper price than the traditional cable bundle. With such an offer, even the most technophobic of those older generations will be enticed by the prospect of their favourite shows at around half the price.

So, whilst cord cutting may not have taken off as quickly as pundits originally anticipated, this should not come as consolation for cable providers: as the population ages, and as VOD and SVOD offerings get more and more competitive, the amount of people who chose to cut the cord will only increase. Indeed, it’s already starting to happen.

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