Cord Cutting: Myth or Reality?

Recently there’s been a lot of focus in the media on “cord cutting” and eliminating traditional Cable Television, especially with the Millennial and Gen Z population now entering the apartment rental market. YouTube TV, Amazon Prime, Apple, HBO GO, Hulu, and of course, Netflix are leaders in providing content online – and now offering live-time sports and news entertainment. There are many options for customers who might want to ditch the traditional cable package.

We asked Anne Manfredi, CEO of RealtyCom Partners, some questions about how cord cutting may impact the multifamily real estate industry –

  • How do you see this impacting our clients and their assets, but more specifically the effect on their partnerships with broadband providers and revenue sharing models?

Residents who are looking to purchase their Video content through other means (streaming and over-the-top solutions) are undoubtedly putting more pressure on the existing hard-wire broadband networks at your properties. Our immediate concern is that our clients have a strong Service Provider in place who can provide a full suite of options for the residents – including high-speed Internet (300 Mbps or above) and traditional cable packages for those who have the desire for that service. The providers you have today must have a technology plan which allows them to increase their available bandwidth in the future, with as little impact to the residents and property as possible.

As for the revenue share, in our experience, what may be depleted by declining cable television subscriptions is more than offset by increased high speed internet subscriptions. The appetite for Internet will continue to grow, so what works today for your properties is not necessarily what will work for tomorrow’s residents – so we advise our clients to have multiple options onsite (at least two providers) and to partner with providers who have the capital and technology plan in place to deliver in the future.

  • With all the over-the-top options now, do you expect people to completely switch to video content online? At some point it seems that the cost of all these platforms outweigh the cost of traditional cable TV. Do you think it’s a content-driven or cost-driven decision?

Service Providers are counting on the switch to online content and are moving in this direction with several of them announcing the elimination of their classic Video service within the next 2-3 years. Moving video content to an online platform is a far more economical use of bandwidth, which is necessary to accommodate the increased bandwidth use by the average consumer who has multiple connected devices in the home. It’s both cost cutting, and content driven but the real driver is the increased need for bandwidth in the home through the explosion of personal and home device use.
As Internet package costs increase, I do think some will be more selective in their choice of over-the-top providers – each service is maybe $10/month apiece, but when you add all of those services up you may come up paying more than you would just buying Television as part of a bundle Internet package.

  • What advice would you give someone thinking about ‘cutting the cord’? Pro’s and Con’s from a personal perspective?

My experience is that right now most people would find that they save very little in trying to parse out an online Television package versus a classic cable service package. In addition, the Service Providers have bundled additional services like Netflix, Amazon and Hulu into their set top boxes making streaming a seamless experience which may be more user friendly for some customers. Eventually we’ll all be “cord cutters” as services are all migrated to on-line platforms, but for now I don’t see any rush to get there early. The fact remains that there are 35 million apartments in the U.S. and many of them have older networks that need to be upgraded, or creative technological solutions that allow them to receive faster Internet.

Our goal as a company is to make sure none of our client’s properties become technically obsolete, but that they also aren’t adopting new technologies and providers out of fear, but that decisions are made with all the facts.

By | 2018-06-12T17:53:04+00:00 June 12th, 2018|