Monday, January 3, 2011

28 Percent of Cable Subscribers Might Switch to Web Video

JP Morgan equity analyst Imran Khan says a recent survey he conducted suggests that 28 percent of people would consider "cutting the cord" and substituting broadband-Internet-delivered entertainment video in place of their current multichannel video service.

Perhaps significantly, those who report they might consider such a change include at least some potential switchers from the 16 percent of people who report they are not unhappy with their current video provider.

The data is another example of the consumer marketing dilemmas service providers face. You would not be surprised if people who are unhappy with their service say they might switch. But even "satisfied" customers seem to be willing to consider a switch.

In some ways, of course, the survey doesn't indicate as much real churn potential, in the near term, as you would think. The questions do not actually test for the attributes an over-the-top substitute would have to feature, ranging from content choices to price and whether the video can be watched on one or more in-home TVs.

It is easy to say one might "consider switching." It is quite another thing to "consider switching" at high prices, or for services that are not equivalent to current offerings in meaningful ways. Most consumers do not watch more than seven to a dozen channels. If those 12 are among the sources a consumer could get "over the top," at a perceived reasonable price, then switching behavior is much more likely to occur.

At some combination of value, price and ease of use, switching will happen.

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