Cord Cutting: 200,000 Canadian Households Could Cancel Cable In 2012
TORONTO - Somewhere in the ballpark of 100,000 Canadian households are estimated to have cut the cord in the past year, choosing to drop their expensive TV package in favour of free over-the-air signals or the growing collections of streaming content online.
A similar number is projected to follow suit in 2012, but those in the TV business aren't too concerned about those figures.
If you ask Canada's largest broadcasters, they'll universally tell you the so-called cord cutting phenomenon is far from their biggest worry. They don't deny that cord cutters exist, and in fact, most say they know at least a few personally. CBC's vice-president of English services Kirstine Stewart says her own sister no longer has cable.
But they just don't believe we're on the cusp of a shakeup that will forever change how Canadians view TV.
"There's certainly a lot of buzz out there that makes it feel like some sort of tipping point has occurred (but) I think (that's) probably two to three years out — plus," said Kris Faibish, executive director of strategy and business development for the CBC's English services.
"But you can see some interesting things beginning to happen."
Lots of Canadians have indeed cut the cord but when you take a look at the overall picture, they still represent just a tiny fraction of TV subscriber numbers, which are still growing, said Brahm Eiley of The Convergence Consulting Group.
"Everybody has a cousin or a friend who's a cord cutter but it's basically statistically insignificant," said Eiley.
"No one should have a heart attack — but it is definitely there."
In the fall, Eiley estimated that of the 11.7 million TV subscribers in the country less than one per cent were bound to cut the cord by year's end, while a similar percentage was expected next year. Cord cutting has been going on for years in the U.S., but the trend has been very slow to catch on — even with much better online options to view content, including Hulu, a larger selection on Netflix, and better prices to get or rent TV shows and movies through iTunes.
"The fact is it took the U.S. four years to get to two per cent and the pace will be slow here as well," Eiley said. "In Canada, there really hasn't been any evidence of cord cutting, this will probably be the first year that it'll register statistically."
For those who can reliably pick up high-definition signals with an over-the-air antenna, cancelling a TV package may not be that difficult. The big Canadian and American networks can be accessed that way, although sports, specialty and premium channels won't be picked up.
It's also getting easier and easier to view a wealth of material online, and broadcasters are actually competing to offer up the most web content — although it's not cord cutters they're looking to please.
Canadians are world leaders when it comes to viewing all sorts of video content online — measurement firm comScore reports the average Canadian Internet user watches about 304 online videos a month — and networks are tapping into the trend.
"There might've been a point of view a number of years ago that all this viewing on other platforms was a bad thing, that somehow it was signalling the demise of television or something like that, and I don't think that's the way it's viewed anymore," said Barb Williams, senior vice president of content for Shaw Media.
She described the growth of online viewing through GlobalTV.com as "persistent and yet I would still characterize it as slow movement."
"There's no doubt that people are finding opportunities to enjoy their favourite shows on other platforms at other times and we're certainly seeing more and more people figure that out."
Pary Bell, vice president and general manager of Rogers Digital Media, said year-over-year growth of online video viewing on sites like Citytv.com is up between 100 and 250 per cent on any given week. While he said the impact of cord cutting isn't feared, he's still paying attention to it.
"Any progressive business person looking at the future is going to keep an eye on things," Bell said.
"The numbers are fairly small in Canada but everyone has to pay attention to where the audiences are going. We're seeing great numbers — on TV, online and on mobile — so we're really pleased."
If you ask Gary Anderson, head of Bell Media Digital, he'll say there's great growth happening with online video on sites likes CTV.ca but most isn't due to cord cutters. He estimates as much as 80 per cent of video hits are from conventional TV viewers who are going online to catch up on episodes they missed.
"Obviously we need to understand the consumer behaviour when it comes down to video viewing ... and we're constantly watching (and asking): 'Is this a behaviour of just catching up, or is it turning into some other behaviour?' And so far what we've seen is it's really a catch-up."
Williams said the growth of online viewing is making it easier to sell advertising and make it a viable part of the network's overall business.
"Now as the audiences are growing ... they're starting to be significant enough that they're worth talking about," she said.
"I'm not the first to say this but free is not a good business model, so we have to somehow recognize that great content comes at a price and somewhere along the chain it has to be paid for. There's a lot of ways that can happen and advertising is a key one in our business."
Online viewers have probably noticed the number of ads interspersed in TV shows has gradually crept up and Eiley thinks the trend will likely continue.
"If you want to watch free now online you have to watch twice as many commercials as you used to," he noted.
Rogers' web shows have had heavy advertising loads for quite a while and therefore there weren't many extra ads added over the past year, Bell said. But no one thinks they've found the perfect formula, he added.
"Everyone's experimenting to see how close they can get to the edge without falling over."