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Dropping TV service in favor of watching Web content gains popularity

June 12, 2011

By Joanne Ostrow

If you have more patience than money, you may want to cut the cord.

If you have the technical know-how to find your favorite movies and TV shows somewhere other than on your television set, it may be time to cut the cord.

And if you are philosophically opposed to sitting through commercials, it just may be time to get out those scissors.

Cord-cutting quitting cable or satellite TV in favor of online video sources has become a popular move for people who want more control over their television watching.

Believers say it's the dawn of a new era of more personalized entertainment choices; skeptics say it's more about saving money in a down economy. Naysayers say the hype outstrips the facts TV remains extremely popular.

But this is no hype: In 2010, approximately 1 million U.S. households cut the cord. By the end of this year, 2.07 million households are expected to have dropped cable during the past four years, according to The Convergence Consulting Group, a company that reports to the entertainment industry.

More people are turning to free Internet video sites such as YouTube (now 2 billion views a day and counting) and Hulu, or to subscription services like Netflix, which streams video instantly to computer screens and can be rigged to play on large flat-screen TVs.

Rather than pay upward of $75 a month for cable, they spend $7.99 a month for Netflix and Hulu, or 99 cents to $2.99 per selection on iTunes or Amazon. And the online services are making their move to capture these wandering customers: Netflix is producing original content; YouTube just began offering a made-for-Internet movie.

Some cord-cutting is attributable simply to challenged incomes: "Cord cutting is concentrated at the low end of the market, and is much more frequently a return to free broadcast TV than it is to Internet video," says a recent report from another consultant, Bernstein Research.

But at the higher end of the market, folks are increasingly buying gizmos that deliver online content to the big screen. A number have popped up in recent years, though they can be pricey: GoogleTV is $300. Apple TV is $99. Roku is $100.

According to the latest Nielsen Co. report, time spent viewing video on computers at home and work increased by 45 percent over the previous year.

"Premium full-length content is where the viewers are heading," Nielsen concluded.

That's likely why Google thought it was worth $1.65 billion to buy YouTube recently.

"I haven't looked back!"

Is it a phase, or the end of television as we know it?

The buzz favors those who've cut the cord and are happy to talk about it.

"I cut cable from my apartment in 2009 and haven't looked back!" Sara Buettner of Broomfield said in an e-mail. "I watch whole seasons of shows on Netflix or watch current episodes on Hulu. It's like I'm behind the times with everyone else though I'm the last to know about viral videos, celebrity scandals, risque ads or anything else 'exciting' that happens in pop culture."

Luckily, she said, she couldn't care less.

The budget-conscious are raving too.

"I pay less than $17 a month for television entertainment; it's like someone trying to sell me a car when I have an EcoPass. I get every bit of telly that I need, and I've got the patience to wait for it. That said, I do watch one show as new episodes are released 'Glee' but I watch it on Fox's website," said April Gosling of Denver.

What are people watching on their computers? Television.

According to eMarketer, more than one-third of online adults in the U.S., or nearly 60 million people, routinely watch full-length television shows online.

While television remains by far the most popular device for viewing content (Consumer Electronics Association research finds nine in 10 households view content on a TV), half of U.S. households are also watching on computers. Further down the list are car video, cellphones-smartphones and MP3 players.

A personal decision

Still, there are good reasons to keep the cord intact, and that makes the decision on how to watch TV a very personal one. Sports programming and certain popular cable shows, such as "MythBusters" or award-winning HBO series, won't show up on the Internet for months after they play on their primary outlet. Local news, local chat and infomercial offerings none of that is handy online.

"We watch the majority of our TV using Netflix, Hulu and borrowing DVDs from the Denver Public Library," said Thomas Spahr. "I really enjoy the change because we are far less likely to turn on the television to veg out."

But he acknowledges a trade-off.

"The one thing I do miss is watching the Rockies, but radio works just fine, and there are plenty of great bars around my home in the Highlands.

"It's a very small sacrifice to make in favor of the extra $1,100-ish a year I will have in my pocket once I break up with Comcast."

And what about social bonding? Cutting the cord can mean abandoning the social aspect of TV viewing, the connections made in watercooler discussions of current programs.

Though that can be a good thing too. "We cut off our cable almost four years ago because we had the TV on way too much, and our then- infant son was becoming too attracted to it," wrote Julie Peasley of Denver. "We now allow our almost 5- year-old to watch TV, but it's still Netflix or DVDs rented from the library."

Made-for-Web content

As a younger generation forsakes the cord, newer technology companies see a chance to meet and keep them on the Web.

Internet businesses are flirting with becoming programmers too.

"Girl Walks Into a Bar" is the first motion picture (with big-name stars) produced solely for Internet distribution playing, for free, on YouTube.

Due in 2012 is "House of Cards ," starring Kevin Spacey , Netflix's entry into the content-producing field. The aim is to be more than a pipeline into people's homes; Netflix also wants a piece of what's flowing through the pipe.

The latest push in this direction: Google is investing $100 million to create programming that will air on 20 new channels on YouTube. The content will be low-cost and Web-only. The YouTube goal is a kind of content that lives somewhere between cat-flushing-toilet videos and network TV shows; that is, low-cost programming that avoids the rough-edges of user-generated content but isn't a pricey, polished TV show.

Will the cord-cutters ultimately reshape the business? Clearly, we're in a time of turmoil and experimentation in the techno sphere of our lives.

For now, connected devices seem to require more effort and know- how than the old "vegging-out" experience of the tube. And, for the majority of viewers, that may be the determining factor.

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