The Cord-Cutting Myth in the Golden Age of TV

No matter where you get your news, you’ve undoubtedly heard that cable TV is in big trouble because people are cutting the cord on high-priced cable plans and moving to Netflix, Hulu Plus, Amazon Instant, and plain old fashioned over-the-air TV. NPR tells the story on the radio: “It’s no secret that cable television is in trouble. With Hulu, Netflix and many networks streaming their shows online, viewers don’t have to watch shows like Scandal or American Horror Story live.”

Consumerist blogs reinforce the myth by attacking their own myths: “Now, I’m saving almost $100 a month, and I still get all the free HD OTA TV I want…”

And newspaper reporters discuss cable alternatives with cord-cutting as a given: “There’s been a lot of talk about cord-cutting for years, but only recently has it started to have a serious impact on the video market… last year marked the first time ever that the total number of subscribers to traditional pay television services fell on an annual basis.”

It’s worthwhile to fact-check the assumptions to see whether video streaming is a replacement for cable instead of supplement. Leichtman Research is a favorite source for claims that people are cutting the cable plan cord in favor of streaming because they’ve chronicled slight declines in cable subs for several years; as recently as March of this year, Leichtman reported that cable TV (and equivalents from satellite and phone companies) lost 125,000 subscribers in 2014.

While 125K sounds like a lot compared to the price of a movie ticket, it’s not big in relation to the cable TV market, which is close to 90 million subscribers in the US. So 125K would be a tenth of a percent, or essentially less than measurement error; it’s certainly not a “serious impact on the video market.” And the latest report from Leichtman says the major carriers actually increased their subscriptions by 10,000 in Q1 2015, again within measurement error but not a loss.

One of the Motley Fool’s writers, Adam Levy, did a thorough exam on this subject last year, finding that there’s a lot of churn but no loss to speak of. And yes, cable prices are rising, but that’s obviously driven by the higher fees that cable pays to Hollywood for content. One real thing that’s going on is more viewers per subscription:

According to Pew Research the percentage of adults aged 18 to 31 living with their parents increased from 32% in 2007 to 36% in 2012. The same study found a one percentage point increase in the amount of people in the age group living in a home with roommates. A survey from Zillow found that the percentage of households with at least two working-age (23-65) unmarried adults increased from 25.4% in 2000 to 32% in 2012. As more people go to college, live with their parents longer, and choose to live with roommates, more people are watching cable with fewer subscriptions.

This takes us back to the original meaning of “cord-cutting” in connection with childbirth. If young adults are going back to live with mom and pop or nesting with roomates for a longer time than they did before rent got so high, the total number of eligible households has to decline.

So yes, Virginia, cord-cutting is a myth and there are probably more cable TV viewers in the US than ever before:

Focusing on the travails of the biggest cable companies obscures the reality that, according to Bloomberg Industries, the total number of pay-TV subscribers is slightly higher now than it was at the end of 2008 and that there were probably more people paying for television subscriptions at the end of 2013 than at the end of 2012.

There is evidence that cable customers are also opting for slimmer bundles, now that so many cable channels offer original programming. So we have more viewers per household and more watchable shows per channel, hence a search for less overwhelming – and cheaper – bundles.

Cable subscribers who are looking for ways to shrink their cable subscription package–dubbed “cord shavers”–should be a much bigger concern for traditional pay-TV operators than cord cutters, according to a panel of experts speaking at the Fortune Brainstorm Tech conference here.

“People are buying smaller bundles,” said George Kliavkoff, president of Heart Ventures. “That’s why we are seeing [Dish’s] SlingTV and Comcast’s announcement,” Kliavkoff said, referring to Comcast’s (NASDAQ: CMCSA) revelation earlier this week that it is planning to launch a $15-a-month OTT pay-TV service that blends streaming of the major broadcast networks and HBO, as well as access to the MSO’s cloud DVR service and thousands of on-demand programs.

So we’ve mistaken a Golden Age of TV – more original programming than ever before – with the wholesale abandonment of cable TV subscriptions. That’s not a a small error, and it misses the anxiety of a world of abundance: we’re probably all missing some TV shows that we’d like.

Television’s golden age is also a gilded cage, an always-on ecosystem of immense riches that leaves me feeling less like the master of my own universe, and more as if I am surrounded.

Shucks, it’s always something. How many myths do you believe?