The New Way to Watch TV

In 2015 Apple's Tim Cook said he believed "the future of TV was Apps" so Apple TV was going to support third party apps for the first time. Cook's comments fueled the notion that Cord Cutting was finally here for real and about to become the future trend in pay television. Customers were going to watch television via an App instead of the traditional way on satellite or cable via a set top box.

Was Cook right? Have a meaningful number of people really started cutting the cord?

Yes and maybe.

The pay TV industry is clearly losing subscribers the past year. During the second quarter of 2016, roughly 812,000 U.S. customers canceled their pay TV subscriptions, according to an estimate from SNL Kagan. Many friends of mine have done a bit of Cord Shaving themselves - reducing their pay TV package down to a cheaper plan - because they just don't watch the big bundle of channels they are paying for.

CNBC ran an interesting story in the fall that indicated that the intent to cut the cord over the next 12 months was at an all time high. Nine percent of millennials indicated they were "very likely" to cut the cord. The reason might surprise you, it wasn't all about cost. Rather, respondents were indicating they were satisfied or getting the content they wanted via over the top services like Netflix or Hulu. Perhaps most interestingly, respondents to the survey indicated their desire to try a "skinny bundle".

This all supports the narrative that people are really rethinking their pay TV subscription. While I don't agree it's as high as some articles may suggest, its fair to argue cord cutting is a legitimate trend in the marketplace. The real question is how many customers have dumped cable and kept their broadband subscription?

What is indisputable is there is a new way to watch TV. Customers now watch shows, not channels. TV is about to go under the most radical transformation in its history. Set top boxes will go away for many, cloud DVR storage will replace the traditional DVR, and many consumers will be satisfied watching on their Laptop, Tablet, Smart Phone, or Smart Television.

As soon as new companies launch such as VIDGO, which run as an App and offer consumers all the live linear channels they want (local channels, live sports, and the most popular live network shows) at home or on the go, we can expect to see significant cord cutting occur.