For years now, the television industry has lived in fear of "cord-cutting," the name given to the idea that audiences will abandon television for the Internet, especially as more content becomes available for streaming or download, often paired with the fear that this loss of viewers (and advertisers) will lead to the collapse of the medium.
This fear isn't based on any definitive evidence, as falling ratings for broadcast and cable shows could also be explained by numerous other possibilities, including more competition from a broader array of channels and other media sources besides television, such as videogames. That hasn't stopped analysts from referencing cord-cutting in articles about a 50 percent decline in ratings over the last decade or how 2012 was the year "when the television ratings really fell apart."
Earlier this month, respected analyst Craig Moffett declared that "cord-cutting is real" and suggested that pay television subscriptions would fall more than 5 percent between now and 2020 as audiences learn to go elsewhere for their entertainment. However, the basis of most cord-cutting conversations seems to be rooted in a simple misunderstanding of the content itself: the idea that online video content is in some way inherently different from television as a whole.
Defining television as video content you watch in one specific environment or using one particular method (while online video content is some unknowable "other") creates a line of demarcation that gets hazy when you consider a show like Arrested Development, which jumped between the two relatively intact. As author Warren Ellis recently wrote, "I think it's worth admitting, now, that 'television' has become one of those legacy words, like 'phone,' that we use to point at a thing, without really fully describing it. It certainly doesn't mean what it used to."
"We don't actually believe there is such a thing as digital video. It's all just TV," said Jon Heller, co-founder and co-CEO of FreeWheel, which works with companies to monetize content within the new media space. "No one buys kitchen television, in terms of advertising, the same way that they don't buy living room television or bedroom television. It is all just TV." The difference, he says, is that the audience now has more choices about when and where they watch, and the television industry needs to figure out how to deal with that diffusion.
One unanticipated side effect of this greater availability, according to the seventh annual Deloitte State of the Media Democracy survey, released earlier this year, is that the availability of more ways to watch content--like laptops, tablets and other mobile devices--may be growing the amount of television watched overall, instead of simply replacing one form with another.
"Our conclusion is, the individuals using tablets and smartphones tend to be much heavier media consumers across the board, and in particular tend to be heavier users of digital applications, such as streaming and downloading, even if they're not using their tablet to do that," Deloitte vice chairman and U.S. Media and Entertainment sector leader Gerald Belson told Wired.
A recent TiVo survey of almost 10,000 of the service's subscribers also reached a similar conclusion: There was "no significant difference" in traditional television consumption between those who subscribed to Netflix and those who didn't. Indeed, those who did subscribe, the survey discovered, may even be more likely to watch more premium cable dramas than those who didn't.
"Our data shows that Netflix is not currently a substitute for traditional television, but offers a way for TV lovers to watch more of the kinds of programs they love," TiVo Research and Analytics, Inc. CEO Mark Lieberman said in the announcement of the survey results. "The future of television may tell a different story, but as of today we've found that the Netflix subscribers in our study are not watching less traditional TV."
That view is echoed by J.P. Colaco, the Senior Vice President of Advertising for Hulu, the premium video content provider co-founded by the parent companies of NBC, Fox and ABC in 2007. "From a market perspective, the growth [of online viewership] is undeniable, and it's accelerating," he told us. "If you just look at the statistics, in 2009, there were about 25 billion videos watched on the Internet each month. Now it's up to 50 billion, so it's doubled in three years, which is pretty amazing. That rate of growth is only increasing now, with the plethora of devices that you can now watch television on."
This additive element offered by new technology goes beyond simply the amount of television being watched, however. "We found it interesting that over 80 percent of people did something else [while watching television], with the top activities were browsing the web, checking email, texts and social media," said Belson. "This suggests there's certainly a huge opportunity for greater viewer engagement than traditional passive viewing, because viewers are comfortable with having that other device, using that second device, at the same time. We certainly believes that suggests an opportunity that might be of interest to advertisers, if not content producers."
Colaco believes advertisers are already responding to that possibility, thanks to the growth of the online audience and the format's ability to reached specific demographics in very targeted ways. "The ways in which you can connect with those audiences has grown more precise," he said. "Advertising has been a necessary evil, but now if [viewers] can get something that's more relevant, [they'll] be more engaged."
On both counts, then--lowering viewership overall and undercutting advertisers--fears about "cord cutting" haven't lived up to the hype. Instead of killing television, the Internet may have actually helped ensure its survival for many years to come.
