Cut, Shave, Never – It’s Not Just the Cord

The phenomena is broadly segmented into three behavioral groups1 Cord Cutters Those who have abandoned the bundled TV package altogether in favor of Over The Top video only from Netflix and Amazon Prime as well as content like HBO Go and CBS All Access a version of which was previously available as part of the bundle2 Cord Shavers Those who have removed many and often premium priced channels from their bundle3 Cord Nevers Those who never signed up for TV packages and simply buy a broadband connection albeit often from a cable company in order to access OTT and other digital servicesThe casual conclusion reached most often is simple If you give people the opportunity to customize and to get just what they believe to represent a fair value exchange that39s exactly what they will doThere is more texture to this discussion much of which surrounds the pricing intersection of the prix fixe and a la carte models This has been dissected extensively elsewhere although the argument that a la carte pricing would be so expensive as to eventually reduce the amount of content available does not seem to be coming trueWhat is more provocative is to think about cut shave and never C S N in the context of a couple sectors far removed from television and to consider if the reasons for the behavior are simply rooted in the rational management of the personal economyWhen C S N is applied to the automotive industry it would be expressed as1 Cutters Those who used to own a vehicle but now do not for many lease rather than purchase has been the preferred option for years2 Shavers Those that used to operate multicar households but now own or lease just one and rely on next generation car rental ZipCar and Car2Go the OTT services of driving ride sharing Lyft Line and Uber Pool or new generation taxi services Uber and its competitors around the world3 Nevers a group or perhaps even a generation that chooses to avoid car ownership altogether evidenced in the US by the increased age of amp8220first licenseamp8221 acquisitionApplied to financial services C S N would be expressed as1 Cutters Those who used to use a retail bank but now do not a tiny but growing group2 Shavers Those who used one institution for mortgages checking savings auto loans and credit cards but now use a large portfolio of providers almost everyone3 Nevers Those who adopt payment and financing services and even currencies that sit outside the purview of retail banksClearly personal economic optimization is an important driver of these behaviors as is the creation of technology enabled marketplaces and platforms that have lowered barriers to entry in many sectors and enabled marketplaces and the sharing economy in othersamp160 When economic advantage is combined with superior customer experience andor user interfaces the perfect storm of disruption ensues but there are wider considerations alsoIn a macro sense the real longterm shift may lie at the intersection of technological progress and the impact and aftershocks of the 20082009 recession The former simultaneously created choice and a huge accelerant of product obsolescence the latter a constant search for value and an aversion to financial commitment evidenced by increasing age profiles of firsttime homeowners and parentsPulling the lens even further back itamp8217s worth noting that for 100 years the desire for ownership was a key driver that drove American dreams both modest and grand For some that dream was fulfilled by the last payment on the car or the house for others by an ethos summarized in the expression amp8220he who dies with the most toys winsamp8221 Ownership as a amp8220life purposeamp8221 may become a historical artifact as the last baby boomers leave the work place and the members of Generation X deal with the consequences of their prerecession choices in a slow growth world The Millennials and Centennials that follow them might be the first but not the last population cohort that believe that to rent and share as both a customer and a provider Airbnb is a better choice both economically and socially than to buy and to ownThe implications for businesses are enormous for those businesses that have pursued customer ownership as a precursor to customer lifetime value even more so especially if the main driver of retention was inertia or artificial barriers to switchingThe opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaVillagecomMyersBizNet Inc management or associated bloggersamp160

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Cut, Shave, Never – It’s Not Just the Cord

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Rob Norman

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