According to one of this week's more obvious headlines, "The Economy, not OTT, is the Biggest Threat to Pay-TV." (I'm still waiting to meet the genius that argues otherwise, but oh well.) The headline refers to a new report from Credit Suisse, the latest firm to touch its toe in the torrent that is OTT. According to this report, 20% of U.S. PayTV subscribers are to varying degrees likely to cancel their service. For the record, this is a very aggressive estimate; almost double TDG's latest research. But this is not what troubles me.
Credit Suisse then repeats the widely held belief that the primary driver for "cutting the cord" is the bad economy. Not that this is wrong - far from it. The bad economy is responsible for much of the negative consumer sentiment observed today. The problem is that once this observation is on the table, it is easy to dismiss everything else as not so relevant. As the headline above suggests, the emphasis is no longer only that the bad economy is at fault, but that specifically over-the-top video is not.
Why would otherwise erudite writers spin these two sets of motivations as mutually exclusive, as if a zero sum game in which the "economy card" is only valid when undermining the "OTT card"? True, this makes for interesting headlines, but it is based on a false premise. Not only are they not mutually exclusive, they are in fact mutually supporting.
The purchase of a good or service is by definition an economic decision. Whether one chooses to ignore certain economic considerations is a personal decision, but there is no denying that economics are involved. In difficult times, one's specific economic reality is hauntingly front-of-mind, manifest in the most basic household purchase decisions. Such are the times in which we live.
It would not be unusual, then, that a survey of this nature, fielded at this time, finds economic considerations such as cost and value high on the list of overt drivers to cancel PayTV service. If the study did not come to this conclusion, one would wonder about its validity.
Yet when making (economic-laden) decisions about cancelling PayTV service, is it incomprehensible for one to wonder with what the service is to be replaced? Of course not - this is itself an economic concern that most rational consumers would consider before making their decision. When I cut the cord some two years ago, front and center was the question of what hodgepodge of applications and services would take its place, not just the cost savings I would enjoy (which was huge).
In reality, there are a variety of "inputs" or reasons why consumers are thinking about cancelling their PayTV service. According to TDG's latest research, when asked why they were inclined to cancel their PayTV service (with multiple responses permitted), 55% cite belt tightening or declining value perceptions (looking to save money, not worth the money I spend, etc.) and 46% mention the availability of alternate sources (using free or PPV online video or OTA broadcasts). Does this justify a headline saying "Economy, Not OTT, Biggest Threat to Pay-TV"? Of course not. Those in the know, know better.
No doubt, hammer-over-the-head quips make for great mass media. For those of us that work in the business, however, TMZ-like press coverage of "cord cutting" conflates the key issues whose resolution will define the future of the market.
So let's be honest. When times get tough, consumers naturally consider alternatives. At the moment, however, for most Americans there simply is no legitimate substitute for full-fledge "cable" TV. Yes, you can hodgepodge together over-the-air and online content, but that falls short of the variety and quality of PayTV.
In the next few years, however, this will change...forever.
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