Cord-nevers could be bigger threat to TV than cord-cutters
Watch out for the growing number of people who have never subscribed to traditional TV
Viewers continue to flee traditional television. Canada's top TV providers have lost almost seven times more customers so far this year compared with the same period in 2014, according to research from the consulting firm Boon Dog Professional Services.
The Ottawa-based company looked at Canada's seven publicly traded TV providers, including Rogers, Bell and Shaw. It found that, in total, they lost 153,000 subscribers up to this point in their 2015 fiscal year.
Boon Dog estimates about 11.5 million people still watch TV via conventional means such as cable, so cord-cutting numbers remain a drop in the bucket, for now. But the industry may be in bigger trouble than we think.
There are other looming threats. The first is the growing number of cord-nevers — people who have never subscribed to traditional television. There's also the cordless-contemplators — people determined to cut the cord, but who haven't quite pulled the plug yet.
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Unfortunately, there are no hard numbers for these groups. "There's no way of knowing unless you contact a household to find out what they're doing, because nobody's tracking that," says Mario Mota with Boon Dog.
Mota believes, however, that we need to pay careful attention to the cord-nevers and contemplators. That's because they have the potential to disrupt an industry that may be shifting faster than we think.
Rise of the cord-nevers
While we watch carefully for the number of cord-cutters, nobody's tracking people like Sukhpreet Sangha, who has never signed up for conventional TV. "It just seemed to be not worth the cost when I could get enough of what I wanted in other ways," she says.
The 27-year-old is part of a generation that feels comfortable streaming all shows using services like Netflix. "I'm not sure I would call [traditional TV] passé, but I would call it unnecessary," she says.
Cord-nevers certainly play a part in the declining subscriber numbers. But it's impossible to know exactly how many Sanghas are out there and the potential effect they could have over the long term.
Mota believes it could be big. "If that cord-never cohort grows and continues to grow with each new younger generation, then [traditional TV] is an industry that could ultimately die or disappear as we know it today," he says.
The only read we can get on cord-nevers is through surveys. A recent U.S. poll by Forrester Research, for example, provides startling numbers. Its online survey of 32,000 American adults found that of the 24 per cent who say they don't pay for cable, only six per cent are cord-cutters, while 18 per cent are cord-nevers.
Forrester predicts that by 2025, 50 per cent of U.S. adults under age 32 won't pay for traditional cable subscriptions.
It led the market research company to conclude that 2015 marks a big shift — the year the "the threat that TV cord-cutters represent became secondary to an even more worrisome problem: the rise of cord-nevers."
There's another untracked group that could also disrupt TV down the road — cordless-contemplators. And they appear to be growing in numbers.
Again, we don't have hard data, but a recent internal CBC analysis report polled Canadian TV viewers on their future plans. The survey found that a fifth of TV subscribers said they're interested in cutting the cord and that a third of them have already started to take action.
The fall 2014 survey of 8,000 people also found that the number of viewers over the past year who say they're likely to cut the cord surged by 31 per cent.
Unlike cord-nevers who have never been won over by cable, the contemplators find they need to slowly adjust to a different way of watching TV.
The shift starts with cord-shaving, explains Mota, with people downsizing to smaller TV packages and signing up for a streaming service to fill the gap.
"You do that in baby steps, incremental steps, [so] then the final cutting of the cord is not as painful as you think," he says.
Kyle Gray from Sudbury, Ont., says he's almost there. He's cut down to a smaller cable package and added streaming services like Netflix.
He predicts that once his special cable deal runs out in a couple months, he will cut ties completely. "I don't think there's a question about it. Cord-cutting is definitely in our future."
Gray admits he continued to cling to cable only because of sports, but he's now confident he can find streaming alternatives. "I don't think I'll be able to live without the NHL, but I definitely won't mind having the extra money from cutting the cord," he says.
The last hope?
While the cord-nevers may be a lost cause, Mota says there's a chance the contemplators could be swayed not to pull the plug.
The CRTC has mandated that by March 2016, Canada's television providers must offer customers a pared-down "skinny basic" core package of channels capped at $25. Customers will also be able to top it up, at an extra cost, with some kind of pick-and-pay channel deal.
Mota says that if viewers sense they can save money with pick and pay, some might stick with traditional TV.
But, he adds, if cordless-contemplators aren't won over, the future for traditional TV doesn't look bright. "If pick and pay doesn't have an effect to slow things down, then it's quite clear that this is an industry in decline," he says.