On Monday J.P. Morgan released data from a recently completed survey of cable subscribers and Netflix customers implying that cord cutting is accelerating. Of course, there is no real data to show consumers are actually going through with the idea of cord cutting in any volume, but that has not stopped some folks from using the data to imply a trend is taking place, or is about to, when in fact it isn't.

Not everyone is falling for the hype and Peter Kafka does his usual fine work of questing whether or not the data makes sense. But others like NewTeeVee.com want to use the survey to imply that Netflix is already turning consumers into cord cutters and that this is a trend. The fact is, the J.P. Morgan Consumer survey is really pretty useless, as are most of the surveys on this subject. The only numbers that matter when it comes to cord cutting are the actual number of consumers who cut the cord and go through with it, not the number that would like to, are "tempted" or are "considering" it. Because for the vast majority of them, they can't cut the cord easily and get the content they want.

Of course when you ask people if they would like to cut the cord or want to do away with spending money on something, the percentage of people that will agree with the idea is going to be high. Who doesn't like the idea of saving money? Is anyone surprised by data that shows consumers like this idea? How is that considered data that's meaningful to the industry? If so many consumers are interested in the idea, then why aren't they doing it? Because for most, there simply is not a viable alternative to cable TV in the market today. Of course there could be in the future, but not today and not anytime soon.

In addition, the report data is flawed because the results combine the number of people who would considering dropping pay TV or have already done so. You can't put those numbers together. If the number of consumers who have cut the cord is so high, where's the numbers to prove it? Outside of the gaming consoles, most of the devices that would allow someone to get over-the-top content haven't even sold 1M units yet. If consumers have tried an alternative to cable and liked it enough to consider cutting the cord as the report states, then why haven't they actually followed through on it? Because as we all know, considering something and actually doing it are two different things, especially when it's not easy.

We should care about the real numbers of how many people actually adopt something, actually use a service, actually buy a device and actually consume content in a different way and NOT the number of people who are simply interested in the idea. Just look back over the last ten years at how many services and products have come to the market because flawed data said consumers were interested in the offering, yet those products then failed because customers didn't actually go through with buying them or they didn't work as well as imagined.

Remember for how many years everyone in this industry talked about the convergence of the TV and the Internet? All the data in the market we were given said consumers wanted it, but how many products and services actually succeeded in the market that followed through on the offering? I would argue none. We're really only just starting to see the beginning of convergence today, ten years after the industry first started making an issue of it.

Does anyone care about real numbers anymore? All day long we keep getting numbers on all aspects of this industry on what will happen, should happen, could happen or is suppose to happen. How about we spend our time and efforts on studying the numbers of what's actually happening? There is nothing wrong with putting out projections, but base it on real data, not speculation from surveying a bunch of consumers who haven't even done the thing you are surveying them about.

One of the definitions of a trend is, "the change in a series of data over a period of years that remains after the data have been adjusted to remove seasonal and cyclical fluctuations". A second definition is, "a pattern that is evident from past events. Sufficient data is required to see if there is a relationship of one or more variables over time". Based on these definitions, we don't have enough data in the market to show cord cutting is a trend. In fact, many were quick to say it was starting to become a trend simply based on only one quarter of data from the cable companies.

Why am I so adamant about this? Because if we portray and hype any aspect of this industry when it's not actually taking place, wrong expectations get set. And when that happens, VCs invest money into companies who won't survive, companies change the focus of their business based on misguided data and the value of the products and services in the industry get inflated beyond reality. We've had this problem as an industry in the past. And when you set wrong expectations with consumers, the end result is even worse.

[Updated: The Alphaline Entertainment service is no longer available effective 12:01 PM CST, 9/19/11.] At the end of last week, while most folks were preparing for the holidays, Sears Holdings quietly launched their new movie download service, originally announced in June, called Alphaline Entertainment. Powered by Sonic Solutions RoxioNow platform, the service is a nearly identical clone to BestBuy’s CinemaNow offering, but with pricing that’s even more expensive.

To purchase many movies on the Sears platform, which has both a rental and purchase option, it costs $5 more than BestBuy’s online platform. And since it’s powered by Sonic Solutions, that also means that like BestBuy’s offering, Sears platform won’t work on the Mac and also doesn’t work today using a Chrome browser.

If there is one thing we don’t need in the market, it’s another poorly priced movie download service offering absolutely nothing of value to what’s already available today. It’s like Movielink all over again. Does Sears really think their offering has any shot at competing in the market when BestBuy, who’s been offering movies online for almost three years now, has almost no traction? The execs at Sears making these decisions must be living in a bubble.

As Engadget pointed out, many times you can get the Blu-ray version of these movies for cheaper than $20, yet Sears seems to think consumers will be wiling to pay that just for a digital copy. And as far as the branding of this new service goes, where was the marketing person when they came up with the name? Alphaline Entertainment? That’s not a name consumers will remember, let alone be able to spell. It’s as if Sears is trying to fail in the market right from the start. A local Redbox and Netflix makes this service virtually useless. I’m sure someone will comment and say that with Redbox you’d have to wait 28 days for some movies and with Sears you can get it online faster, but so far, that 28 day wait has not stopped Netflix from growing.

I can’t remember ever running into anyone who thought that the Sears or Kmart brand meant digital distribution or disruption. And this new service isn’t going to change that. But to me, the real question is why does Sears even want to get into this business in the first place? There is not much money to be made re-labeling video services and it’s not like BestBuy, Blockbuster and Walmart are falling over themselves with cash from their online offerings. In fact, neither BestBuy, Walmart, Blockbuster, Sony, Microsoft, or any of the other movie download services outside of Apple will even say how many movies or TV shows they have rented or sold.

I’m sure someone will say Sears does not care as it costs them almost nothing to operate the service since they don’t have to license content and they simply split any revenue they receive. But then why bother with such a service when you know it’s not going to disrupt the market in any way or even generate much in the way of revenue? I think the fact Sears has entered the online movie distribution business shows just how much hype exists around this segment of the market. It’s as if all big box stores now feel like they need to get into the business just to make it appear as if they are hip or so they can tell their shareholders they have a strategy for digital. As least Walmart actually went out and spent money to acquire their own platform when they bought VUDU last year and offers a service that has some uniqueness to it.

Sears online model and pricing is the same one that Blockbuster uses unsuccessfully to try and compete in the market yet there is no differentiator with this Sears offer and absolutely no reason for any consumers to switch to it.

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– Movie Studios Just Don’t Get It, Part IV: Pay More For Movies On USB Drives

– Sony’s Day-And-Date Strategy: Stream Movies For $24.95, For 24 Hour Rental

Talk about a crowded industry. In addition to BestBuy, Sears, Walmart, Apple, Sony, Microsoft, Netflix, and others offering online movies for rental and purchase, Intel just announced their plans to launch their own movie and video service, dubbed Intel Insider, by the end of March. But unlike other services in the market today, Intel's movie and video platform will be tied directly to their new second generation Core processors also just announced at CES.

It's an interesting approach and one that's quite different from all of the others offerings in the market as it offers the studios hardware protection for their movies, as opposed to software protection of the content. Pricing for movies has not yet been disclosed, but the release does say that movies will be offered in 1080p quality and will be available the same day as DVD/Blu-ray releases. Intel also mentions a couple of content partners in the release including Warner Bros. Digital Distribution and Cinema Now. In addition, Intel also plan to allow consumers to stream movies wirelessly to their TVs using what Intel calls WiDi 2.0.

We're going to see a lot of news like this coming out of CES this week and it's amazing to think of how quickly the landscape is going to change for the way consumers find, purchase and shift the consumption of video from one device to another.

A big day of news for Vizio. After already announcing that Vizio would launch Android based tablets and cell phones later this summer and a new video download service, Google has now confirmed via their blog, that Vizio will incorporate the Google TV platform in TVs and Blu-ray players slated for sale later this year.

I'm not a big fan of the Google TV platform as to date, it simply does not work the way it should. But Google is in this for the long-term and Google TV is not something Google needs to win at overnight. Partnering with Vizio is really interesting because Vizio is all about getting good TV technology into the hands of as many people as possible, at a cheap price. And with Sony's Internet TV, powered by Google TV being expensive, there is a good chance that Vizio will simply bring the Google TV platform to the masses, at no additional cost.

(Updated: with photos, link to press release and hands-on previews from Engadget, phone, tablet.) With CES starting this week, there have been lots of rumors leading up to the show including reports that Vizio may get into the tablet business. And thanks to a WSJ article from Sunday night, it turns out that the rumors are in fact true. Later this summer, Vizio plans to introduce an 8" tablet as well as a mobile phone with a 4" screen. Both devices will run Android and while pricing had yet to be disclosed, the WSJ interviewed Vizio's CTO as saying their aim is to, "provide the best that's out there to your typical Wal-Mart shopper," something that Vizio has been very successful at with their line of TVs.

The company also plans to launch a new video download service which will run on all of their devices and will allow users to starting watching a movie on one Vizio device finishing watching it on another. Vizio's cell phone, dubbed the Via Phone, will have a 4" screen, a front-facing camera and a rear-facing five megapixel camera. Vizio's tablet, named Via Tablet, will have an 8" screen, WiFi connectivity (but no cellular service), three speakers and a front-facing camera. Vizio's mobile carrier partner has yet to be announced but I've heard from various folks who think it will be Verizon.

If there is one thing Vizio has done very well in the TV business, it's forcing pricing down in the industry and making up for it by the sheer number of units they have sold. If Vizio take this same approach with tablets, and I expect they will, Vizio could very well disrupt the tablet space, especially with the strong ties they have with retail chains. Vizio is a well known brand with a big install base and has the ability to get in front of a lot of customers very quickly.

I don't know exactly how many tablets will be released this year, but I've seen some folks who estimate it to be as high as 100. Even if it's half that, I think it's a safe bet that we'll be looking back on 2011 as the year of the tablet and I would not be surprised if Vizio is one of the leaders of the pack. They won't be displacing Apple anytime soon, but they could very well compete for a large portion of the market, which iSuppli says will be 61M units sold this year.

I'm a big fan of Vizio's TVs, have three units myself, and have helped friends and relatives purchase many others. If Vizio approaches the tablet space the same way they have dominated the TV market, I suspect Vizio will be successful in expanding their business. I'll have a review up of Vizio's new tablet later in the year.

This morning Apple announced that sales of their $99 Apple TV would hit 1M units this week. While that’s a nice round number to reach, it’s not meaningful in the bigger picture and analysts who are quoted saying things like, “one million is a real benchmark” really don’t understand the impact of devices on the over-the-top market.

Sales numbers for devices are pointless without talking about usage. I personally have two Apple TV’s at home and rarely use them at all. In fact, I only use them when I want to test something or need to review certain functionality of the device. So how often are people using the Apple TV device and how much content are they consuming through it? Apple won’t say. It’s nice of them to give out overall iTunes sales figures of movies and TV shows, but they won’t say what percentage of those are via the Apple TV.

Microsoft says that 42% of Xbox LIVE Gold members in the U.S. watch more than 30 hours of digitally distributed television and movies a month. Roku, who is due to reach 1M units sold by the end of this month said in September that the average Roku customer uses their device 43 hours a month. Those are the kinds of numbers we should care about, sales penetration and usage.

And even the devices that do have a big footprint in the market like the Xbox 360 and PS3, both Microsoft and Sony won’t tell us how many movies or TV shows they have sold or rented via their online services. Why? Because the numbers are still so small. I love devices, but we have to set the right expectations on the impact they can have in the market and far too many want to imply their impact is greater than they are. Even Netflix, who streams more video online than anyone says that the vast majority of the usage of their streaming service is to the PC today, not devices.

The Xbox 360 is the number one selling device in the home, connected to the TV and broadband and has sold 21.9M consoles in North America. That one device by itself has not made any content owner rich and has not changed the over-the-top video landscape in any drastic way. So why is Apple selling 1M devices considered such a big deal? It’s not. Even if Apple sells 1M units a quarter in 2011 and end the year with 5M total devices in the market, that will be less than 15% of what the Xbox 360 or PS3 will have.

And considering Apple is renting content for $0.99 on the Apple TV, there’s just not a lot of revenue to be had. Lets assume that the average Apple TV user buys one video per week, for the entire course of the year. That’s a content market size of only $52M a year today. And even if we assume Apple reaches the 5M sales number by the end of 2011, those same assumptions means the market size is only a quarter of a million dollars which is still not a big deal.

No matter how you run the numbers, they simply aren’t big and it’s one of the reasons why the studios are still fighting digital. They don’t see the potential revenue yet and they won’t for some time to come. Until we have mass-market penetration and usage of the devices, the studios won’t have an incentive to give consumers the kind of content they want. I wish they would see the light and help foster the adoption of digital now, but that’s simply the way the studios think.

We see a lot of posts talking about devices, but how often do you see people talk about the sales numbers and usage of the devices? Most who are giving out quotes about these devices don’t even know how many have been sold and haven’t used the majority of the platforms they are talking about. Of course everyone always wants to talk about Apple TV, because it’s from Apple, yet there are far more important devices on the market, offering more content than Apple, which have a larger install base than the Apple TV.

• Xbox 360: number sold as of Nov. 2010: 21.9M in NA, 45M worldwide (source: NPD)
• PS3: number sold as of Sept. 2010: 16.6M in NA, 41.6M worldwide (source: Sony)
• Roku: expect to reach 1M sold by end of 2010 (source: Roku)
• Netgear Roku: number sold to date, too early to know
• Apple TV: number sold as of December 2010: 1M (source: Apple)
• Sony Netbox: number sold to date, too early to know
• Boxee: number sold to date, too early to know
• Logitech Revue Box, Sony Internet TV: number sold to date, too early to know
• WD TV Live/Live Hub: number sold to date, no data released. I estimate less than 2M combined
• TiVo: number sold to date: I estimate 750K TiVo HD units (source: estimate based on TiVo’s subscriber #s of 1.4M)
• Broadband enabled TVs: iSuppli predicts almost 23M by 2013, TDG predicts 43M by 2014, DisplaySearch predicts 31M by 2013, Samsung predicts 20M by 2012
• Broadband enabled Blu-ray players: as of October 2010, the total installed base of Blu-ray Disc playback devices in the U.S. was 21.1M. What percentage of those are “broadband enabled” is not known.

I constantly see people writing about devices, like this article yesterday, saying Amazon’s Video On Demand service is available on the Xbox 360, even though it isn’t. There is so much misinformation coming from the media and analysts on what these devices and platforms can or can’t do, now just imagine what it’s like for a customer who’s trying to figure out which device to buy. Lots of confusion.

In addition to setting the right expectations, analysts and bloggers also need to stop comparing hardware devices like Apple TV to platforms like Google TV. One has nothing do with the other and they don’t compete at all, today. Apple sells a $99 piece of hardware, Google does not sell any hardware. Google is a platform, Apple TV is a device. Stop comparing the two. Of course to be successful you need the device, the platform and the content to all work together, but right now, almost nobody has all three working together in volume, except for the Xbox 360 and PS3.

The good news is that the quality of the video on these devices is getting better, the content being offered grows each year and content platforms like Netflix, VUDU, Zune Video, PlayStation Network, MLB, NHL, Hulu Plus and others are helping to create awareness and adoption. But with that awareness comes the problem with massive fragmentation and no standards.

Instead of so many analysts commenting on how many units of any device has been sold, I’d like to see them commenting on what the financial impact is on the industry from the usage of these devices. Who’s making money from the adoption? How much money are they making? When will devices truly start impacting content licensing models? Can device manufactures survive and make money selling boxes if they don’t get traction with licensing their platform? These are the kinds of questions we should be discussing and the topics we should be trying to run numbers on so we know the real impact devices have on the market. Just talking sales figures, by themselves, is really pointless.

Related: Apple TV and Roku Go Head-To-Head, Here’s The Winner

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