More Households Cut the Cord on Cable
Amid tighter budgets, more people are trying to save money by cutting their cable cords. In response, cable companies are beginning to experiment with new Internet services. — In what's shaping up as the home-entertainment equivalent of severing …
Context & Ripple Effects
In mid-2009, with household budgets under recession pressure, Nielsen-measured 'cord-cutting' has moved from anecdote to a pattern the Wall Street Journal puts on its front page, with a same-day MediaPost pickup amplifying the finding. What makes the story notable is not the volume of defections — still small at this date — but the industry's first visible response: cable operators beginning to experiment with their own Internet-delivered services rather than treating the web purely as a threat.
First-order effects
- Households trimming budgets cancel or downgrade pay-TV subscriptions for immediate savings, showing up directly in cable operators' monthly subscriber counts.
- Nielsen's measurement of cord-cutting gives advertisers and programmers an early warning that the pay-TV audience base may be less durable than assumed.
Second-order effects
- Cable companies respond by experimenting with new Internet services, trying to keep would-be cord-cutters inside their own billing relationships instead of losing them entirely.
- If operator-built online alternatives gain traction, content owners face pricing questions over whether web distribution cannibalizes the traditional bundle that funds most programming costs.
Third-order effects
- If recession-driven cancellation hardens into habit once households discover web video substitutes, the pay-TV bundle itself comes under structural pressure toward smaller, cheaper packages — though how fast depends on whether operators' own Internet offerings satisfy defectors.
The trend: The 2009 recession is turning cord-cutting into a measurable behavior, marking the first crack in the assumption that the cable bundle is the default way American households get television.