TiVo Not Seeing Much Cord-Cutting, Executive Says
TiVo doesn’t “see much evidence of cord-cutting,” Evan Young, senior director-product marketing, told the Piper Jaffray investor conference in New York Wednesday. “Because of the economy there may have been sort of a cord-shaving in the past few years,” he said. But “the kinds of people who would cut the cord might not have been the highest value subscribers in the first place,” he said.
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"There is a lot of value that is provided” by cable and satellite providers in some of the service bundles they offer, including sports channels and HBO, said Young. “For a certain kind of consumer who is perhaps never going to take the highest tiers” of service, “there might be an opportunity to cord-cut,” he said. “But in general we have not seen much” cord-cutting, he said.
That is the case in the U.S., said Michael Lantz, CEO at Accedo Broadband, a Stockholm-based provider of smart TV and IPTV applications. But it’s a “slightly different situation” in other markets, “especially” Europe, he told the conference. Consumers in countries including Germany and the Netherlands are increasingly opting for “very competitive” offerings for their TV content over a traditional TV subscription service, he said. Europe is “driving the innovation much more because the value chain is eroding much more quickly” there “than it is in the U.S.,” he said.
Jo Holz, Nielsen senior vice president-client research initiatives, recently said much the same thing, telling the Media Summit in New York that only a minimal number of people have actually “cut the cord.” Earlier this week, Nielsen said the “Zero-TV” group that views TV without traditional cable or satellite subscriptions represents less than 5 percent of U.S. households. But it said the number of cord-cutters is growing. The U.S. has more than 5 million Zero-TV households in 2013, up from just over 2 million in 2007, it said. Sixty-seven percent of those households get their content via devices other than a TV, including 16 percent from the Internet, 37 percent from a computer, 8 percent from a smartphone and 6 percent from a tablet, it said.
"For many years, we're going to continue seeing many devices connected to the TV,” Boxee CEO Avner Ronen predicted at the Piper Jaffray conference. But “eventually, there’s no real reason for it to continue and there should be consolidation” among the devices, he said. “Either the TV is going to have some basic networking smarts and there’s going to be a home gateway, or some other device” will accomplish all the same things, he said. “There’s no reason for multiple devices to exist” in the future, he said.
"The traditional broadcast architecture is still great for delivering live broadcast” programming, and “it’s not going to go away any time soon,” said Ronen. Video on demand will disappear “much quicker than linear programming,” he predicted.
Lantz agreed “it will take quite a long time” before consolidation happens among devices that provide TV programming. There will continue to be “innovation” and “new players entering the market, and all of this will lead to fragmentation,” he said. It will be “at least 10 years before” the industry sees “any type of real consolidation,” he predicted.
Only a small number of consumers who own connected TVs are actually using the connected functionality, said Piper Jaffray analyst Mike Olson. One explanation for that could be many consumers are already connecting to the Internet via other devices, said Ronen. For example, 60 percent of U.S. households have a game console and “most of those are connected” to the Internet, he said. Most consumers are only looking to use Netflix, Pandora and a couple of other popular apps and they can already get those via their game consoles, he said. The top five apps across any connected device account for more than 90 percent of consumers’ connected device app usage, he said. Adding more apps to a TV doesn’t make it better and it’s “actually getting worse for consumers” when more apps are added, he said. There’s no need for more than 50 apps on a TV, he said. “Different TV makers are seeing different attach rates” for their connectivity platforms, he also said.
There’s “not much traction” being seen for Google TV among TiVo users, said Young. “As a consumer product, I think Google TV is an interesting kind of early-adopter, experimental platform,” he said. The other panelists agreed Google TV doesn’t seem to be much of a factor in the market.
A growing number of TV viewers is using smartphones and tablets while they're watching TV. But it remains to be seen how viewers will use their mobile devices while they're watching TV in the future, said Lantz. His company is providing media companies with solutions to help TV viewers use mobile devices to interact with programs they are watching on TV, he said. The “holy grail” for advertisers will be the ability to use mobile devices to identify who is “in front of the TV” and provide interactive features to them based on that, he said.