Fear of a Cord-Never Generation
For years cable and satellite companies have maintained they're not afraid of people canceling their service and watching video over the Internet (i.e. cutting the cord), but the cord nevers—the young people who never signs up for pay-TV service in the first place—are a totally different story. The pay TV providers are sensing that a generational shift in the way that young people think of their video entertainment. Last night, Dish chairman Charlie Ergan made a rare admission at the AllThingsD D Conference — "I think people are cutting the cord" — but then shifted to an entirely different problem: "I think we ought to be hooking people on pay TV when they are young." In other words, head off the cord-nevers, not cord-cutters. Kids these days often don't see cable as a necessity, opting for a mix of Internet options instead of the pricey TV bundles filled with channels they don't want — and media execs haved started to notice.
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That statement makes Ergan the second TV bigwig to admit that young people are approaching television media differently than previous generations. At the end of last year, Time Warner CEO Jeff Bewkes invoked the very term "cord never," admitting that these people exist. Unlike Ergan, Bewkes thinks cord-nevers will eventually grow up, start earning more money, and then become paying customers for the quality television cable packages he offers because streaming TV can't and never will offer all the best stuff. (With shows like Netflix's House of Cards that, however, is debatable.)
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Of course, though Dish is in the pay TV business, it's a bit of an insurgent in the business. Time Warner spun off its cable company, but with properties like HBO it is still heavily invested in a business model that relies on big cable bundle. Dish, which saw stalled growth in the last year, is competing with disruptive technologies like its Hopper, which allows its viewers to skip commercials.
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No matter the eventual outcome for the pay-TV biz, having these executives admit these people exist is an important justification on its own. Cord never numbers are much harder to measure than cord-cutting numbers because of the way cable and satellite providers report their figures. But, if the people on the inside say it's happening, that gives some confirmation that the cord-never trend has some merit. And even if these young people eventually get traditional pay TV packages, as Bewkes believes will happen, the industry would probably like it if they signed up earlier.
