UPDATE December 12, 2018—Opting out of cable and satellite TV is becoming increasingly common in the face of declining traditional TV and burgeoning video streaming alternatives such as Netflix and YouTube. Cord cutting has been hailed as a consumer-friendly alternative to paying for expensive subscriptions and is changing the way that people consume media. Rather than flipping through channels on the cable box in hopes of uncovering a good watch, people are receiving personalized feeds of video content that are ad-free. Every day, cord cutting is becoming a relevant decision to households that have access to the internet and video streaming services.
Here are the top 9 cord cutting statistics that are driving marketers away from TV to digital:
From 2013 to 2017, the cable pay industry shrunk 2.4% annually. Most recently, cable giants reported 2017 fourth-quarter results showing a 3.4% year-over-year decline in paid TV subscriptions—the highest rate of decline since the trend first began in 2010. With nearly half a million customers leaving in Q4 2017, the industry was left with only about 83 million household subscribers. Approximately 33 million total households do not pay for traditional TV service forms.
Between 2014 and 2017, reports estimate that there were 6.5 million cord-cutters and cord-nevers combined. In the first quarter of 2017 alone, more than half a million Americans joined the group, and market loss in all of 2016 was approximately 1.5 million subscribers. Cord cutting is a trend that is becoming more popular, and the rise and differentiation of online video services have been major catalysts.
The number of cord-cutting households has tripled since 2013, with 14.1 million households only using streaming services. About 33 million households in the U.S. currently don’t pay for traditional TV services, with that number expected to nearly double by 2022. On the other hand, around 83 million households (or 66% of American households) still subscribe to a cable or TV provider.
In 2017, approximately 15% of Americans were cord cutters and 9% were cord-nevers, or adults that have never subscribed to a cable or satellite program. These numbers are expected to increase as Gen Z begins to choose and purchase video subscriptions. Furthermore, 10% of U.S. subscribers were “extremely likely” to cancel within the year, up from 2% in 2012. Subscription cancellations are driven in most cases by affordability. 74% of cord cutters claimed that cable or satellite subscriptions, which average about $103 per month, were too expensive for them.
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Cable and satellite TV subscriptions are maintained in 74% of U.S. households. The high number of pay TV subscriptions can be explained by the fact that two-thirds of pay-TV consumers bundle their subscriptions with internet. Here, it seems that many pay-TV consumers are primarily concerned with paying for internet services rather than maintaining access to cable or satellite content.
While traditional TV subscriptions are seeing a zero to negative growth rate, the growth of subscriptions for video streaming has accelerated from 10% of U.S. consumers in 2009 to 49% in 2016 and most recently, to 55% in 2018. Of the 49% of consumers that were subscribing to paid streaming content in 2016, 60% were Gen Z, Millennials, or Gen X. Despite paying for these services, streaming subscribers only used the subscription 35% of total time spent on streaming video content. 40% of streaming video content came from free video streaming services and 25% from other sources.
Video streaming services total over 130 today that range in variety and price, and they represent the new generation of media magnates. These services offer thousands of movies and TV shows from major media companies and publishers, and some have even started including and prioritizing original content. Netflix, for example, is putting original programming at the forefront, spending $6 billion on original content in 2017. Social media platforms are also bolstering original content. YouTube Red plans to launch 40 new original shows within the year, and Facebook is looking to create long-form anchor content that will be owned by publishers and feature advertisements.
43% of cable TV subscribers say that they only thing holding them back from cutting the cord is live sports. Sports accounts for 37% of TV content and remains the major reason for TV subscribers to maintain their pay subscriptions. However, livestreaming sports events, from the Olympics to the Super Bowl, is increasing though. Already, 25% of sports content is being viewed online. It is only a matter of time before most sports content will be made available through online video streaming subscription.
TV watching habits have changed drastically with the arrival of on-demand, ad-free video, and TV streaming. 37% of consumers claim to have binge watched a TV series because they were hooked. In addition, 73% of U.S. consumers admit to having binge watched television and the 90% of Millennials and Gen Z that binge watch propels this trend. Over one-third of Millennials and Gen Z binge watch weekly, and on average, they will watch 6 episodes or about 5 hours of content per sitting. The binge watching behavior is becoming more common and can only be sustained with video streaming subscriptions. This means that video streaming subscriptions are both shaping and maintaining content viewing preferences and behavior.
Breaking news used to be exclusively delivered through television. Now, for Gen Z and Millennials, social networks are serving that function. 4 out of 5 Gen Z and young Millennials list their primary news sources as Reddit, Twitter, Facebook, YouTube, BuzzFeed, Instagram, Snapchat, and their desktop newsfeed. Previously, only 36% of Gen Z and 32% of Millennials got their news through social media sites, about 15% higher than the U.S. average of 19% at the time. Further, Gen Z and Millennials are 18% less likely to get their news through traditional television than the U.S. average of 40%. The most commonly used social media platform for news is Facebook.
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Cord cutting has also led to declining efficacy of TV ads. Only 18% of Gen Z and 25% of Millennials find that TV ads are highly influential in their buying decisions. In comparison, 27% of Gen Z and Millennials find that an online recommendation from a friend, family member, or social media influencer will help them in a buying decision. For instance, social media is more effective than TV commercial in publicizing new TV shows. Social media recommendations are extremely powerful, and are becoming mainstream media. With 84% of all consumers on social, social media content has truly become mainstream media.