Could this be the start of the Great Cable Channel Recession? Maybe. Esquire Network, the joint venture between NBCUniversal and Hearst that began in 2013, today announced that it’s going to the promised land – OTT – later this year.
The channel was the victim of the continued erosion of the pay-TV audience, especially male Millennials, the Esquire Network’s primary audience.
"Men today consume content on a variety of platforms and it is essential that we follow our viewers," said Adam Stotsky, president of Esquire and NBCU's E! Entertainment channel.
That audience segment has been the tip of the spear of consumers looking for more than legacy pay-TV providers could offer, shaving the pay-TV cord or, worse, cutting it altogether.
Since 2011, the number of subscribers who have said they were “extremely likely” to drop pay-TV has been steadily increasing, topping 6% last year. Nearly one-in-10 Millennials in a recent Magid Associated survey said they intend to cut the cord.
Of course, surveys have reported consumers have intended to cut the cord for years.
The big difference? More and more of them are following through with it.
On the whole, the industry is losing better than 2% of its video subs through cord cutting and cord shaving. Credit the youngest Millennials, the cord nevers, as the most crucial contributors, failing to fill the audience churn created by aging viewers, literally, dying off.
"When you think about the fact that there's an even higher number in the younger generation that's never had cable outside of their parents' home, not only do I think this is going to continue, but I think it's going to continue to rise in absolute numbers," Magid Advisors president Mike Vorhaus told CNBC.
The reasons for cord cutting vary, but they can be placed in one bucket: Satisfaction with the options provided by services like Netflix, Hulu and Amazon.
The number of content owners and cable nets that have gone, or are planning to soon go direct to consumer has exploded, with 2017 looking to be a banner year as the industry looks to trim poor-performing audiences.
The fact that the Esquire Network was the first casualty of 2017 is telling in that its audience is precisely the audience least satisfied with traditional pay-TV. It’s also a testament to the reluctance of the industry to adapt to change.
The channel focused on upscale, male Millennials was a replacement for wait for it – another cable channel focused on upscale, male Millennials, Style, and had been set to replace yet another cable net focused in the demographic, G4tv, whose only lasting impact on the industry was Olivia Munn, who hosted Attack of the Show before going on to bigger and better things.
In the spring, we’ll find out if a legacy TV company – NBCUniversal – can help a show pivot into the digital world when it takes the content direct to consumers on Esquire.com.