Recent price volatility in the media sector got us wondering: is “Cord cutting” the home cable box in favor of online entertainment really hitting critical mass? To answer that question, ConvergEx's Nick Colas turned to our old friend Google Trends. This resource allows you to track how many Americans are searching the Internet for terms like “Cancel cable” or “Netflix” and see multiyear trends in such activity. In a representative cross section of 9 key searches we find that yes, consumers are exploring their options but it is early days yet. “Cancel cable” is hitting new highs in terms of search volume, but “Get cable” searches still outnumbers it by 9.9x. The bad news: 5 years ago the ratio was 14x. As for content searches, the search data shows a mixed bag. “HBO” searches are ramping higher, but “ESPN” and “Nickelodeon” are solidly lower. The big three traditional networks – ABC, NBC, and CBS – are all lower as well. The upshot is that the media landscape has been in flux for several years – Wall Street is only beginning to catch up now. That means more volatility to come as investors begin to discount a distinctly more uncertain future for these names. You can date the modern era for entertainment to a very specific date: October 23, 2001. That is when Steve Jobs announced the launch of the iPod to a cluster of obviously skeptical (and occasionally bored) journalists. The presentation is vintage Jobs, but without the fanboy hype and spontaneously raucous applause that would be hallmarks of later Apple product launches. Indeed, Jobs sounds at times to be a tad uncomfortable, even as he walks through the merits of a hard drive based music player. Customer acceptance was slow. It took Apple three years to sell 3 million units. Things finally started to click in 2004, with Jobs making it to the cover of Newsweek flashing a fourth generation iPod with the words “iPod, Therefore i Am”. The rest is pretty much history. The iPod led to the iPhone – that launch presentation was a good deal better received – in 2007 and the iPad in 2010. The point here is that even in the supposedly fast-paced world of consumer technology, mass adoption takes time. Years, not days or months. But when the momentum starts to build, you know it. Such is the case with the seemingly sudden consumer interest in “Cord cutting” – shorthand for people cancelling their cable TV subscriptions in favor of online entertainment resources. For the better part of the last 30 years, cable has been one of the “Stickiest” items in a household budget. During recessions, cable TV companies barely skipped a beat as customers would – if necessary – delay a mortgage payment or a credit card bill in favor of keeping uninterrupted access to television entertainment. The stability of those cash flows allowed many cable companies to grow with debt-financed capital, giving shareholders outsized returns. Now the news that some cable companies are losing customers is forcing capital markets to reconsider just how loyal cable customers might be and what that means for every company in the entertainment industry ecosystem. To analyze some of the underlying consumer behaviors, we turn to Google Trends. This tool, available for free online, allows you to track how many times Google users have searched for a specific term over time. For example, enter “Get a dog” into Trends and specify US users, and you’ll see that interest in dog ownership is on the rise in the U.S. and the most pooch-friendly states are West Virginia, Kentucky, and Arkansas. The search term “Get a cat” is only about half as popular on Google, in case you were wondering… Turning back to cable TV and entertainment trends, here are 9 sample Google Trends analyses that seem to tell the story... 1. “Cancel cable”. As you would expect, Google search interest in this term is rising rapidly. Indexed to the number of such searches in July 2010, for example, there are 1.6x more such queries now. One noticeable seasonal factor: searches for cancelling cable peak at this time of year since households tend to move during the summer. Also worth noting: the search “Get cable” still outnumbers “cancel cable” by 89:9, or 9.9x. Still, “Get cable” as a search query hasn’t grown in 2 years, where “cancel cable” certainly has. Also worrisome: New York and California, two large markets, are also in the top 5 states where “Cancel cable” is most popular. 2. “Cable TV”. Overall interest in cable tv is on the wane, according to the Google Trends data. The graph of search volumes looks like a gentle range of hills, with each peak through time slightly lower than the previous one. Over the last decade, searches for “Cable TV” are down 24%. 3. “Netflix”. On a global basis, Google searches for Netflix continue to climb and have doubled since 2011. In the U.S. the story is different, with searches for the company flat since 2011. Interestingly, the domestic markets that search the most for the online entertainment company are predominantly rural: Idaho, Maine, Montana, New Mexico and Utah. 4. “HBO”. This granddaddy of cable content has seen dramatic growth in search volumes since 2011. Since that time, four times the number of Google search users have queried for “HBO”. We suspect the April 2011 launch of “Game of Thrones” might have something to do with that pickup and highlights what desirable content can do for interest in a given distribution channel. 5. DirecTV and Dish TV. Satellite TV still seems to be a growth business according to the Trend data. DirecTV gets roughly 4x the number of searches as Dish and is seeing more growth in Google searches of late. Search interest in Dish is, however, stable to up modestly. 6. The Big Three Networks – ABC, NBC, and CBS. The long term trend lines for all three major networks are slowly moving lower, as you would expect. ABC still has the lead, with NBC and CBS currently even. Interestingly, “HBO” searches now tie those for NBC and CBS. 7. ESPN and Nickelodeon. Google search interest in ESPN peaked in September 2012 and was down 16% from those highs two years later in September 2014. Measure from July 2014 to July 2015, the drop is 34%. Nickelodeon’s drop in Google search volumes over the last year is 29%. 8. “Buy TV” versus “Buy iPhone”. A phone screen and earbuds is now as viable a video system as an old wooden console television was to the Baby Boom generation. The Google Trend data shows this well, with searches related to TV purchases now as numerous as those related to iPhone purchases. Layer in the other smartphone makers and more people search for purchase information about phones than televisions. 9. “HDMI”. OK, this one is a little nerdy, but it really tells the whole story. In order to take advantage of online entertainment while still using your regular television, chances are you’ll need an HDMI (High Definition Multimedia Interface) plug and a device like Apple TV or Google Chromecast. The number of Google searches for HDMI in the U.S. climbed steadily through 2012 and have leveled off since. That means that consumers already knew about (and had likely purchased a TV with) the necessary hardware to take advantage of online offerings long before the recent “Cord cutting” concerns. When the cable tv cord gets cut physically, it is the HDMI port that takes up the virtual slack. The upshot of these results is clear: the change in consumer attention away from cable and to other sources of entertainment has been a long time in the making. Interest in everything from ESPN to broadcast channels has been on the wane for years. Compelling content like HBO’s Game of Thrones drives search eyeballs and, it seems, viewers as well. And consumers were upgrading their hardware long before they knew they wanted to watch Netflix or Amazon original programming streaming on the Internet. Does this mean cable TV is doomed or no one will watch broadcast TV again? Of course not. Consumers largely stopped buying Compact Discs when iTunes really hit, but they didn’t stop listening to music. Even the “Original” iPod design that Jobs showed back in 2001 wasn’t exactly new, with inspirations from a 1950s transistor radio and a more modern land line phone. And that worked out pretty well...