For years, cord cutting has been the looming cloud hanging over the cable industry.
Because streaming services likeNetflix, Hulu, andAmazon's Prime video cost so much less than cable, it has been assumed that customers would forgo traditional pay television in favor of cheaper alternatives. That would lead to the cable industry becoming a lot like the music business, where the big players survive but are a sad shadow of their former selves.
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It makes sense in theory. Who would would pay $60 or so to much more than that to Comcast,Frontier Communications,Time Warner Cable, or any other pay-TV company when cheaper choices abound?
The only problem has been that cord cutting -- while it seems like it could, or even should happen -- has at best been a trickle, and even that is slowing, according to a new study from TDG Research. People have not given up paying for television the way they dropped paying for music, and it's possible they may not.
What does the research say?In the first half of 2015 the percentage of adult broadband users (ABU) moderately to highly likely to cancel their pay-TV service declined 20% between early 2014 and 2015.
"Cord cutting proclivities have held steady for several years, with approximately 7% of ABU pay-TV subscribers moderately or highly likely to cancel their service in the six months following the survey," said Michael Greeson, TDG Co-founder and Director of Research in a press release. "In early 2015, however, this number declined to 5.7%. This is the first time in five years we've seen significant change."
Additionally, the group of consumers saying they "definitely will cancel" their pay-TV service in the next six months has been cut in half -- down from 2.9% in early 2014 to 1.4% in early 2015, according to the study.
The numbers ring trueTDG's studywas conducted in the first half of 2015 and "thus indicative of cancellation proclivity in the second half of 2015," the research firm explained. The slowing number of cord cutters was reflected in recent Q3 earnings reports including, but not limited to:
- Comcast lost 48,000 video customers during Q3 compared to 81,000 in the same period in 2014.
- Charter Communications gained12,000 new video customers, improving on a 9,000 subscriber loss in the same period of 2014.
- Time Warner Cable lost 7,000 video subscribers for the period, which it called its " best third quarter since 2006." The company lost 184,000 video customer in Q3, 2014.
This follows a second quarter where the top nine cable companies lost about 260,000 video subscribers compared to a loss of about 510,000 subscribers in 2Q 2014, according to Leichtman Research Group. Satellite providers did not fare as well, losing 214,000 subscribers compared to a loss of 78,000 in 2Q 2014.
The only clear loser in the space was actually the one winner. Telephone company cable providers only added 4,000 new customers compared to284,000 net additions in 2Q 2014.
Still, when you look at the actual Q2 and Q3 numbers it does look like cord cutting is slowing as TDG predicts.
"The fact that the decline occurred among those most likely to cut the cord was key, and ultimately translated into lower losses in Q3," Greeson added.
Slow is not neverThe TDG research, backed up by actual Q3 results, suggests that cord cutting has slowed and immediate consumer interest in leaving cable behind has also diminished. This buys Comcast, Charter, Frontier, Time Warner Cable, and the rest of the time to adjust the business models.
It shows that it's too early to predict the imminent demise of cable, but the industry still may well bleed to death, albeit slowly. In addition, while the number of people likely to leave has dropped precipitously, the percentage moderately likely to cancel has not dropped by all that much. This shows an industry that is still sitting on a razor's edge.
Cord cutting may have slowed, but the industry remains vulnerable. The TDG survey is good news for the industry, but it's not a reason to ignore that there are compelling reasons for people to cut the cord.
The article Survey Shows Fewer Adults Considering Cutting the Cord originally appeared on Fool.com.
Daniel Kline has no position in any stocks mentioned. He has probablystrengthenedhis cord in recent years. The MotleyFool owns shares of and recommends Amazon.com and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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