The pay TV industry is now confronting both cord cutting (dropping cable altogether) and cord shaving (downgrading to less expensive bundles).
HBO will begin selling an online service that does not require a pay TV subscription sometime in 2015, CEO Richard Plepler said Oct. 15. While he offered few details, Plepler said the U.S. service would be a "stand-alone, over-the-top" offering. HBO currently offers such a service in several Nordic countries.
CBS Oct. 16 announced All Access, a subscription-based online service that lets users watch live and on-demand shows like "The Good Wife" and "Survivor" on their computer and Android or iOS device. The service costs $5.99 per month and does not require a pay TV subscription.
"We think cord shaving is a reality going forward."
Several TV industry executives told the Wall Street Journal Oct. 9 that they're now more concerned with cord shaving (downgrading to less expensive bundles) than outright cord cutting. Nearly 5% of households dropped ESPN and TNT over the past four years.
ESPN and TNT are estimated by SNL Kagan, a research firm, to be the two most expensive cable channels, with ESPN collecting $6.04 per subscriber and TNT collecting $1.44 per subscriber. Skinny bundles, which are aimed at cost-conscious consumers, typically don't include these and other expensive channels.
These skinny bundles typically start at around $30 per month (although the price can vary by market) and often include broadband Internet and a limited selection of cable channels. More expensive bundles including hundreds of channels can cost more than $100 per month in some cases.
ComScore data published Oct. 14 reveal that 24% of 18-to-24-year-olds do not have a traditional pay TV service. Of these people, 13% previously had pay TV service but later cut the cord while 11% have never subscribed to a pay TV service.
Some 300,000 people in the U.S. dropped their pay TV service in Q2 2014, according to an Aug. 7 report from the research firm MoffettNathanson. MoffettNathanson's data show that, while people are still cutting the cord, the rate at which they're doing so has stabilized.
An April 2014 survey published by Experian Marketing Services said that 7.6 million U.S. households, or 6.5% of all U.S. households, had cut the cord -- up 44% in the past three years. Ownership of an iPhone or iPad "noticeably increases the odds" that a household will cut the cord, Experian said.
"While the term cord-cutter implies that a household had a cable or satellite TV subscription that was cancelled, young adults starting out on their own for the first time may never pay for TV service."
Experian notes that nearly 25% of adults between the ages of 18 and 34 who subscribe to a streaming video service like Netflix or Hulu do not pay for a traditional TV service.
Experian also found that households who only watch streaming video on mobile devices are 1.5 times more likely to cut the cord, while those who watch streaming video on TV are 3.2 times more likely to cut the cord.
Dish Network said Aug. 5 that it had reached a deal with A&E Networks that will see the entertainment company provide programming from channels like A&E, the History Channel, and Lifetime for the satellite provider's upcoming online television service.