Time Warner will never offer HBO Go as a standalone streaming service because it's not what the people want, says CEO Jeff Bewkes, asking us to look at the data, which he claims proves there aren't that many cord-cutters. "The whole idea that there’s a lot of people out there that want to drop multichannel TV, and just have a Netflix or an HBO — that’s not right," he said in a statement, following the company's earnings report in which said that all told HBO and Cinemax now have 100 million subscribers up from 92.9 million at the end of 2011. "Look for the data, you won’t find them," he continued. OK, Bewkes, challenge accepted. We will take a look at the data and see if this cord-cutting thing is just the obsession of a few Internet loud-mouths or a burgeoning market opportunity.
How many people are cord-cutting these days?
Those numbers are pretty low: 2.65 million people have forgone their cable subscriptions for alternative methods between the years of 2008 and 2011, according to an April 2012 report by The Convergence Consulting Group. Nielsen has a similar figure, finding that the number of households paying a multichannel provider last year declined by 1.5 million.
Those millions are a very small number compared to the multi-millions of cable subscribers out there. The same Neilsen report showed that 98 percent of viewing was on traditional TV in the fourth quarter of 2011. The National Cable & Telecommunications Association -- a cable industry trade group -- puts the exact numbers at 57.9 million for cable video and 46.4 million for digital video, as of March 2012. That means the 2.65 million cord-cutters are around 2.5 percent of the television viewing population. Others have put the figure a bit higher, however. A recent Deloitte survey found that 9 percent of people surveyed have cancelled their cable subscriptions within the last year. (AllThingsD's Peter Kafka does not believe those numbers.) Nielsen has 4.5 percent of television-owning homes picking streaming over cable, as the chart below shows. However, that study just looks at television-owning households. Some of the people who get all their television viewing from the Internet probably don't own televisions, either.
Ok, but what about the trends?
Cord-cutting is on the rise; cable is not. That same Neilsen report noted a 22.8 percent increase in cord-cutters over the past year. Cable subscriber growth fell for the first time ever in 2010, but has since leveled off, with 2011 ending in flat subscriber growth, according to Credit Suisse analysts from last fall. Total pay TV industry subscriptions have remained unchanged at 100.8 million. "Over the same period, however, occupied households have grown by 1.25 million," said Credit Suisse analyst Stefan Anninger. "In turn, pay TV penetration has fallen from 84.1 percent in the third quarter of 2010 to 83.2 percent."
How about these people called cord-nevers, how many of those are there?
The cord-cutting numbers don't count people who have never subscribed to cable, as the stats usually look at people who are canceling subscriptions. People who never bought cable — say, young people living on their own for the first time — won't show up. There has been a lot of blog talk about this phenomenon, with not very much data to back it up. The anecdotes are out there, but we don't know how much statistical damage these people have done.
Ok, so does the data say people want this?
The above statistics show that a growing number of people have forgone cable for other sources of media. So, yes, more people than before do prefer streaming. But it doesn't totally measure "want." We know at least 163,673 people say they would pay for HBO Go as a separate entity, according to the Take My Money HBO campaign on Twitter. But what about people who want to cut the cord but have resigned themselves to the annoying situation the cable companies has demanded? A lot of people might want to do it, but don't have the opportunity yet. It's a bit of a foregone conclusion for a company to ask, how many people are buying a product we aren't selling? That Delloitte survey found another 11 percent were planning on cutting the cord over the next year. If people could pay for the services they want by choosing the streaming options, we imagine those numbers would be a lot higher.
Image via Shutterstock by Brocreative.