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Cable TV faces 'cord cutting' threat

News, 15 December 2014

SEATTLE: American TV viewers are increasingly turning to the internet as their preferred gateway for content and channels in a trend that has implications for traditional cable providers, a new industry report has revealed.

According to Marchex, a mobile advertising technology company that studied data from 1.1 million consumer phone calls to leading cable providers across the US, the way Americans pay for TV programmes is changing significantly.

The Marchex Institute, the company's data and insights arm, found over a quarter (26%) of new customers only wanted TV via the internet compared with 22% who asked for cable only.

This suggests that Americans are increasingly looking to "cut the cord" with cable providers in order to stream their favourite TV shows over the internet, the study concluded.

Furthermore, nearly 40% asked providers about opting for specific channels, suggesting more TV viewers now want flexible packages that allow them to cherrypick content.

Of those consumers, nearly half (47%) wanted premium channels, especially HBO, while sports fans were five times more likely to ask for ESPN than Fox Sports (20% versus 4%).

Interestingly, in a finding that should provide a degree of comfort for cable providers, the report found the sports category to be "critical" in leaving fans largely unable to "cut the cord".

Chen Zhao, director of analytics at the Marchex Institute, warned cable providers that they need to adapt because change is crucial to their future success.

"Cable companies are coming face-to-face with the threat of disruption," she said. "Our data shows that providers need to start addressing pressing consumer demands; otherwise, they risk losing real market share when people decide to cut the cord for good."

She went on to tell Business Insider: "it's clear that consumers want very specific things from their cable providers — and, at the most fundamental level, they increasingly just want a reliable internet connection to serve as a gateway to their own channels and choices."

Data sourced from Marchex, Business Insider; additional content by Warc staff