blogger's note: This article was originally written in August 2014 and published here on business2community, but, due to a mixup, it was published under someone else's byline. It is my article, I wrote it, every word. And as so much of what I predicted is coming true, I figured it was worth giving it another airing here on my own blog....
It's not just the cable companies who should be worried about the growth of cord cutting. For the television networks, the end is well and truly nigh.
I can pinpoint the exact moment I fell in love with television: November 2, 1982 at 4.45 p.m. I was 5, and I still remember the pure joy and unbridled excitement I felt when my family sat down to watch Channel 4 debut on British television. Finally, we had four channels to choose from.
Fast-forward 30 years. I'm sitting on the couch with my 6-year-old son who is in search of some entertainment. He picks up the iPad, launches YouTube and watches his favorite Rainbow Loom expert walk through some tips for a Starburst bracelet. Entertainment nirvana achieved.
He didn't even glance at the television remote. The allure of 157 channels, filled with content someone in a Madison Avenue office thinks he should like, was simply not there. In that moment, I knew my beloved television was dead.
For TV, the Bell Tolls
Television, the corporate-structured, spoon-fed, ad-heavy/content-light concept that is delivered direct to your home through a hypnotic box, is in its death throes. It is slowly, inexorably, being replaced by consumer-driven, a la carte, interest-focused, content-heavy internet video that is delivered direct to you wherever, whenever and however you want it.
While popular internet video providers such as Netflix and Hulu still rely heavily on television-produced programming to attract and retain audiences, the ground-swell of internet video has started. And there is very little the big players in the legacy television industry can do to stop this seismic shift. It will re-distribute and re-define the industry.
And yes, that ground-swell starts with my 6-year-old son. Because he is television's future customer, and he is growing up without television in its traditional sense. His is the on-demand generation. He doesn't tolerate commercials ("Just fast forward them, mom.") He has no concept of what a TV Guide is, and why should he? His content is delivered to him when he wants it and where he wants it. His restrictions are entirely parental, and in no way corporate. Seasons, series and "cliff-hangers," once the backbone of the television revenue model, simply do not factor into his entertainment roster.
In a sense, every internet video consumer - a category into which the microscopically-examined but difficult-to-find "cord cutter" fits neatly - is a 6-year-old child. We are all now learning how to consume content on our own terms. It's a liberating experience, if a somewhat alien one for those of us raised on a steady diet of after school Saved By the Bell, dinner with the 6 o'clock news, and primetime television show cliffhangers that made national headlines (I'm looking at you Dallas and Friends).
According to research by The Convergence Consulting Group, cord cutters were estimated to number 6.23 million by the end of 2014. Defined as US households that cancelled cable to rely solely on internet video and whatever was available over the air, cord cutters added 5.06 million to their numbers between 2008 and 2013, with 1.25 million in 2013 alone.
While analysts argue that this is a minute number compared to the number of cable subscribers in the country, this growth rate in the face of considerable adversity is remarkable. Just think about trying to cut the cord in 2008 compared to today.
The Online Content Transition
Initially, the barrier to internet video dominance was the computer screen. Sure, it was fun to watch a cat roll around in a hamster ball at work, but when you got home the laptop was the last thing on your mind. Thanks to set-top boxes such as the Roku, Apple TV and Google's Chromecast bringing internet video into the living room, that barrier has been broken.
The next hurdle was an inability to "sit back and watch." Fiddling with remotes, inputs, and an eternal search for where your content existed was enough to make you want to throw $150 a month at a cable company. But then the Smart TV came along, with the alluring promise of an all-in-one experience. While there have been cries of the premature death of the Smart TV, the technologies coming down the line look promising, especially the Roku-powered Smart TV and the long rumored Apple television set. Even the current Smart TVs, while far from perfect and with lots of concerns over upgradability, offer a decent solution for the entry-level cord cutter. My mother is never going to understand how to operate a Chromecast, but a Smart TV is much closer to her comfort zone.
With the hardware to stream internet video directly into the living room hitting the mainstream, the scrutiny has shifted from how we're consuming our content to what we're consuming. Traditionally, it is cable companies who have been the most concerned with cord cutters. After all, it's the cable cord that's ostensibly being cut. But in reality it's the television networks that should be shaking in their boots.
While cord cutting began with viewers dropping the cable to watch network television online, the reluctance of networks to propagate their content online has pushed viewers to eschew regularly scheduled programming, opening the doors ever wider to internet video.
"During primetime hours, 30 percent of internet traffic is Netflix, 60 percent is digital video," Jeffrey Cole, Director of the Center for the Digital Future, said at the 2014 Purina Digital Summit.
Digital video is not just online television. It's a new breed. One that goes beyond original programing on Netflix or Amazon Instant Video, even with those organizations' smashing of cable television conventions (such as releasing an entire season of House of Cards all at once, or asking users to vote on which show concept it should produce next). Netflix may be changing the way we consume content, but internet video is changing the content we consume.
"Eleven-year-olds don't watch TV, but watch four hours of YouTube and subscribe to 25 YouTube channels," Nick DeMartino, of online video company Theatrics.com (and formerly of the American Film Institute), said at the Future of Television conference last September.
The initial reaction of television networks to this threat was to take these "internet videos" and legitimize them by making them into cable television programs. That's how Annoying Orange got on Cartoon Network. But a lot of internet video content creators have little to no interest in being on cable. Sites such as CollegeHumor.com get millions of views for their original comedy videos and articles, as well as their steady stream of user-submitted videos, pictures, articles and links.
"What's special about our content is we can go directly to our fans and engage them on the platforms they are on," Shane Rahmani, general manager of CollegeHumor, said at the same conference.
A Content Rich Future
Herein lies the crux of my 'television is dying' argument: Internet video delivers niche content that the giant unwieldy corporations television networks can never be nimble enough to provide.
My son wanted to watch a 13-year-old girl make a bracelet out of rubber bands. Unsurprisingly, there is no dedicated cable channel for Rainbow Loom making. But 11 million other people had already watched Ashely & Steph do their Starburst, and 122,000 people had subscribed to watch anything these "two girls who love soccer, dancing, and so much more!" had to offer. Combined, their YouTube videos had been watched 32 million times since they debuted a little over a year ago. And that is just a tiny slice of YouTube's viewing audience. Over six billion hours of video are consumed on YouTube every month, and, according to Nielsen, YouTube reaches more US adults ages 18-34 than any cable network.
Niche content is nothing new to cable. But true Rainbow-Loom-level niche content has rarely been successful on a platform where advertisers seek the lowest common denominator, demographics are targeted by age and income, not interest, and production costs are high. Today, the internet has democratized content, allowing Rainbow Loom-lovers to broadcast their rubber-band obsession to the world for next to nothing.
Taking it up a notch, Leo Laporte's TWIT.tv webcasting empire is an example of the future of this trend. Born out of the ashes of the failed 24-hour cable channel TechTV, TWIT began as a podcast about technology and has transformed into a near round-the-clock, live-streaming internet "network," produced at a fraction of the cost of a cable channel. Crucially, it attracts a highly lucrative, specialized audience who Laporte has monetized through sponsored ad reads in each episode, turning his podcasting gig into a multimillion dollar company.
TWIT's flagship "netcast," This Week in Tech, is downloaded by a quarter of a million people each week. Its more than 20 finely focused weekly shows, including This Week in Google, iPad Today, All About Android and Windows Weekly, are downloaded five million times a month. But crucially, their production is also viewed live by a small, but rapidly growing and fiercely loyal, legion of devoted fans via always-on video streams of the TWIT studio in Petaluma, California.
TWIT is just one more example of the thousands of niche content providers stepping up to take viewers' eyeballs away from network television by giving them what they want, when they want it, how they want it, and on whatever device they darn well choose to watch it on. While cable may have become the symbol for the cord-cutters' revolution, what they're ultimately cutting out of their lives is the content it provided.
Farewell television, you'll be missed.