Video Cord Cutting Not Yet at the "Disruption" Phase

One rule I have consistently relied upon when assessing new technology adoption is to assume there is a quantum process at work.

In other words, only after a longish period of gestation, or an accumulation of small changes that leave markets largely intact, does there occur an “eruption” or inflection point after which the market rapidly changes.

Another way of putting matters is that forecast qualitative changes do not occur in some predictable linear fashion. In fact, big changes are non-linear. Observers watching for change tend to see small, incremental changes for a longish time. But big transformations normally look that way, right up to the point where the quantum change happens.

That is the “knee of the the inflection point,” where rates of change suddenly change in a non-linear fashion.

One practical implication for competitor strategy: a contestant has to be careful to structure operations to ride out a longish pre-change period. In other words, hitting the market too early is as dangerous as coming to market too late.

And the thing about quantum change is that, once the shift happens, it is too late for new competitors to get in, as the market reforms so quickly.

That will happen with the video entertainment market. Right now, it is just “drip, drip, drip,” with the observable small incremental changes happening at a low level. At those rates of change, it will take decades for anything meaningful to happen.

But that won’t be what happens. There will come a point in time, which we have not yet reached, when drastic change happens, very fast, with big shifts in consumer behavior and spending.

Right now, we are in a phase of gradual buildup of pressure in the video entertainment business that will, one day, lead to a quantum shift in the business.

AT&T and Verizon are adding video customers, to be sure. Those two telcos have added about 233,000 and 140,000 customers, respectively.

At the same time, the whole market has contracted by about 380,000 video customers. None of that is cataclysmic.

Those figures are perhaps statistically significant, but not yet evidence that the quantum shift has begun.

When the shift happens, scores of millions of accounts will shift in only a few years time.