TV cord-cutting: the smallest ‘epidemic’ in history

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The Canadian Radio-television and Telecommunications Commission (CRTC) released the 2013 results for the cable* and satellite companies yesterday. Despite headlines showing that one in six Canadians are thinking about “ditching” cable or satellite TV, the reality is remarkably different.

21% of Canadians had access to Netflix as of last summer, and the number is almost certainly higher now. But despite the popularity of Netflix and other over-the-top (OTT) video services, there has been almost no change in the number of pay TV subscribers in the last year. Here is the detailed breakdown:

 

2012

2013

Change

Percent Change

Cable*

8,688,757

8,815,628

+126,571

+1.46%

Satellite

2,825,677

2,691,204

-134,473

-4.76%

TOTAL

11,514,434

11,506,832

-7,602

-0.07%

 

That’s right: regardless of what you hear in the media and from your friends, the actual number of Canadians paying for a package of TV fell by less than one tenth of a percent. Just how few people are 7,602? The smallest city in Ontario is Dryden: pop. 7,617. 🙂

Now a few caveats are in order.

  1. The number of households in Canada grows by about 150,000 per year on average. So if pay TV penetration rates were steady, we should have seen an increase in the total. The fact that we didn’t means that pay TV penetration is falling, which is a sign of some cord-cutting going on. (Although still less than 1% of total subscribers.)
  2. Traditional TV tends to be more popular with older Canadians and less popular with younger demographics: that has been true for decades. But something new appears to be happening: the historical popularity of traditional TV has experienced a very sharp inflection down with those 16-24. That doesn’t matter in 2013, or even 2014. But as these people move out of their parents’ homes and create new households, and if they continue to be averse to traditional pay TV packages, then we will soon see the numbers of total subscribers begin to fall at a faster rate than we have seen thus far.
  3. But probably only single percentage points at most. Those who provide pay TV services have a number of tools to retain and attract subscribers: ranging from bundling TV in with other services, or buying up exclusive rights for ‘must see TV’ like live sports.

But for 2013 and 2014, the phenomenon known as cord-cutting is almost entirely hype. As predicted by Deloitte’s TMT Predictions, in our 2013 edition**!

As I said to CBC Radio yesterday: “If there is an epidemic of cord-cutting going on, it is one of the smallest epidemics I have ever heard of.”

* Historically, the CRTC has talked about the pay TV industry as Broadcasting Distribution Undertakings or BDUs. And they have reported on subscriber numbers for satellite, cable (through a coaxial cable) and telco IPTV (through a twisted copper pair wire) as three distinct categories. This year, they have lumped cable and IPTV together as one category, called cable. This makes a lot of sense, since most Canadians don’t care (or know) which wire is delivering the signal to their house. And the packages of TV channels and prices are basically the same from both the legacy cable players and the telcos, so aggregating them is a good thing.

** By the way, the cord-cutting rate in the US is very similar. According to one analyst, there were 251,000 fewer subscribers between cable and satellite (and telco TV) services in 2013, a drop of 0.2%. Which suggests that Americans are cutting the cord at a slightly faster rate than Canadians. But the numbers are so small I wouldn’t rely on that trend: even very small changes (another Dryden or two) would change the balance.

 

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3 responses to “TV cord-cutting: the smallest ‘epidemic’ in history”

  1. theradicalrex says :

    I don’t think a lot of people are aware of the benefits… especially to those of us who are extremely strapped for cash. We love being cable free! We have a an HDTV antenna and TV antenna amplifier and it gives us every channel we need and we only had to pay for it once. In combination, we paid a mere $110… that’s very close to the cost of one month of the cable service we were paying for before. All of our favorite shows are available with our HDTV antenna- we haven’t missed cable at all, and the savings have been really nice for us :). It may be a small epidemic now… but I’m thinking it will spread.

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