Chances are you’re familiar with the term “cord cutting” or the practice of replacing one’s cable television with a less expensive alternative Internet-based service like Netflix or Hulu. After all, cord cutting has caused major waves in the cable industry. According to research from the Leichtman Research Group, the 13 largest pay-TV providers—including companies like Time Warner, Comcast and DirecTV—lost about 150,000 video subscribers during the second quarter of the 2015 fiscal year, all thanks to cord cutting.
There’s a new phenomenon, however, that’s causing a stir in the pay-TV industry; dubbed “cord shaving,” it veers from the complete cancellation of cable to a less-drastic downsizing of services. In other words, a growing number of pay-TV consumers are opting for smaller, less costly bundles (ranging anywhere from $10 to $50 a month) that don’t include popular, expensive channels like CNN, TNT, ESPN, Fox News and the Disney Channel.
According to data compiled by Nielsen and the Wall Street Journal, the top 40 most widely distributed channels in 2010 have lost an average of 3.2 million subscribers, or more than 3 percent of their distribution.
While smaller packages have been available for some time, their adoption was low because pay-TV providers didn’t widely market them. Now that subscribers are threatening to cut the cord completely, however, they’ve started to promote these less expensive bundles in hopes that it will keep subscribers from jumping ship altogether.
With the traditional business model imploding, pay-TV providers are scrambling to find ways to turn things around. Many of them are turning to offering TV Everywhere services, which helps to discourage cord cutting and cord shaving by allowing customers to access content from their network through an Internet-based service.
Whether TV Everywhere is the answer to providers’ problems is yet to be determined but will play out in the near term.