Report: Value Perception Leads to Cord Cutting

BOSTON: More than 2 million U.S. cable customers dropped their subscriptions in 2010, with new research from Strategy Analytics suggesting that "value perception" is leading to the cord cutting.

While cable subs were down 2 million for the year, teleco TV and satellite saw gains in customers over the same period. The figures more than made up for cable’s losses, netting some 273,000 new pay-TV subscribers overall. A new report from Strategy Analytics, Winning? Cable’s Charlie Sheen Problem, examines the factors of the subscriber losses, and says that the perceived value of the service is playing a large role in customers dropping cable subscriptions. "Throughout the past seven consecutive quarters of subscriber losses, the inclination of cable has been to point the finger at various external factors," said Ben Piper, director of the Strategy Analytics Multiplay Market Dynamics service. "Our analysis shows that neither the economy nor the housing market is to blame for these subscriber defections. The problem is one of value perception."

Survey research reveals that cable subscribers had the lowest perceived value of all pay-TV platforms. More than half of respondents who said they intended to "cut the cord" or cancel their pay-TV subscription without signing up for another indicated that low value for money was a motivator. "Much ink has been spilled on the topic of cord cutting," continued Piper, "and even skeptics are now admitting that it can’t be ignored. It’s important to be circumspect, however. We see cord cutting as a more of a ‘check engine light’ than a death knell for pay TV."