Understanding the drivers of cable TV cord shaving with big data

ABSTRACT

Over the years over-the-top (OTT) platforms such as Netflix and Hulu have attracted a lot of customers and caused serious disruptions in the media and advertising industry. This paper examines the underlying cause of such a disruption by using big data from one of the leading multi-system operators (MSO) in the US, which provides cable TV, phone and Internet services to multiple communities. More specifically, the dataset allows us to model the behaviour of 267,276 unique households, who collectively watched 270,718 unique programs and examine the effects of online video consumption, different genres, and use of additional cable services on cord shaving. The findings suggest the most important predictors of cord shaving are video on demand and time spent watching different genres, especially live sports and news. Finally, we discuss the practical implications of the research for content distributors, content providers, and advertisers.

KEYWORDS:

• Cord shaving
• TV genre
• media consumption
• OTT
• big data analysis

Acknowledgment

The authors thank Northwestern University’s Spiegel Research Center for providing access to the data. They also thank Tom Collinger for helpful discussions.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. We note that the reduction of one’s budget for specific media use is consistent with the definition of cord shaving presented earlier in this paper.

Additional information

Notes on contributors

Morana Fudurić

Morana Fudurić is an assistant professor at the Marketing department, Faculty of Economics & Business, University of Zagreb. She received her Ph.D. in communication sciences from the Universita della Svizzera italiana (Switzerland), where she investigated relationship orientation in social media and its impact on company performance. In 2018, she received the European Marketing Academy Junior Faculty Visiting Program Award and spent six months doing research at Northwestern University. She conducts survey, experimental and data-driven research to investigate antecedents and consequences of media consumption and technological disruption. Her current research interests center around computational advertising, data-driven marketing, integrated marketing communications, and digital media consumption.

Edward C. Malthouse

Edward C. Malthouse is the Erastus Otis Haven Professor of Integrated Marketing Communications and Professor of Industrial Engineering and Management Science at Northwestern University. He is also the research director of the Medill IMC Spiegel Research Center. His research interests center on media marketing, database marketing, advertising, new media, and integrated marketing communications. He develops statistical models and applies them to large data sets of consumer information to help managers make marketing decisions. Malthouse is also currently the co-editor of “Medill on Media Engagement.” He was the co-editor of the Journal of Interactive Marketing from 2005-2011 and now acts as Editor Emeritus for the journal. He also served as a guest editor for two special issues at the Journal of Advertising. His professional experience includes software engineering for AT&T Laboratories, corporate analytics training for Accenture, BNSF, Digitas, Nuoqi and Capital One, and developing segmentations for Cohorts and Financial Cohorts and Motorola.

Mi Hyun Lee

Mi Hyun Lee joined the IMC faculty as an assistant professor in 2018. Her research interests focus on the economic and societal aspects of new technology-enabled channels as well as empirical modeling and marketing analytics. Her current research explores emerging mobile channels and their impact on consumer behavior by using both statistical and econometric models. Lee also worked as a senior research fellow at Samsung Research Institute of Finance in Seoul, South Korea.