TV Everywhere

Disruptive Devices: Part 1: iPad – Cord Cutter or Churn Buster?

May 6, 2011 at 8:26 am vanessavigar Leave a comment

By Vanessa Vigar

No other device has disrupted the way we watch TV as the tablet, or more accurately, the iPad. The cord-cutter in some instances is also proving to be the churn-buster in others and the question of rights stuck somewhere in the middle.

Gary Schultz, President and Principle Analyst at MRG, concurs that the iPad is going to have a massive influence on the business of Pay TV operators as it is one of the first multi-screen devices that they (operators) are going to migrate their business to beyond the PC. He also believes that “follow me” will next year, extend outside of the home, powered by the roll out of 3G and 4G services and facilitated with the growth of devices such as the highly popular iPad.

Pay TV operators are not the only companies turning attention to the tablet. Hulu Plus has just debuted on the Xbox 360, and HBO launched its HBO Go app for iPhone and iPad. More and more content companies are offering their content either directly or in partnership with operators via the iPad.  Check out the latest and greatest IPad apps from content providers and operators in Greg’s previous post, which also addresses the important issue of content security: Streaming Video? Of course there’s an app for that… and more coming!

IPad – The Ultimate Disruptor?

The research is conflicting. According to the Diffusion Group, more than one-third of iPad Owners (33.9%) are likely to cancel their Pay TV service in the next six months, more than twice the rate among iPad Intenders (13.5%) and three times the rate among average adult broadband users (9.6%).  However, as the OTT market matures, some analysts are beginning to question how big an issue cord cutting really is.

There is no doubt that it is a threat for Pay TV operators, however, it’s clear that most are quickly getting to the point where they are enabling subscribers to watch TV and extend their subscriptions across multiple screens, namely  iPads.  GigaOm even suggests that in the case of Time Warner, their iPad app may actually be reducing churn and perhaps if Time Warner Cable’s CFO Robert Marcus is to be believed, attracting new subscribers.   In the same vein, one of our customers, an Asian Pay TV Operator, experienced that 90% of those signing up for its new multi-screen broadband video service, were new subscribers.

All Screens Are Created Equal

Let’s not forget that however bigger a role the iPad (and tablets in general) play in enabling operators to talk to customers across any screen, anywhere at any time – and support any business model – what we call Media 3.0. The tablet is just one screen of many. The Morgan Stanley Internet Trend report clearly illustrates the importance of desktop and mobile Internet and as Michael Grebb rightly points out in his post on TV or Not TV… don’t forget that at the end of the day, all screens are created equal.

…or are they? All I want for Christmas is an iPad (or Samsung?)

According to the Yankee Group, the tablet has hit its inflection point. The sales curve is rising faster than that of HDTVs, handheld gaming consoles or even MP3 players. They predict that total global revenue from tablet devices like Apple’s iPad and Samsung’s Galaxy Tab will increase from $16 billion in 2010 to a whopping $46 billion in 2014. By 2015, the U.S. tablet market alone will generate more than $7 billion in revenue.

The market leader without a doubt is the iPad. IHS iSuppli forecasts Apple will ship 39.7 million units for all models of the iPad this year alone. A staggering amount when you consider that the device only entered the market a little over a year ago and we are still suffering the effect of a global recession. The growth of the iPad and its effect on the market – especially on how we create, watch and share content is unprecedented.

To date, I have resisted buying a tablet, but I know that with a house full of multi-screen users ranging from a 3 year old has been able to navigate his way around photos, video and apps on an iPhone for almost two years, to a grandmother who wants to watch BBC2 cooking shows while sitting in the garden and get some face-time with her grandchildren via Skype, I know my days are numbered.

Entry filed under: Broadband, Industry Trends. Tags: Connected TV, download, Hulu, Internet, iPad, piracy, Samsung, Skype, Streaming Video, Tablet.