2017 was a particularly bad year for cable TV. America’s largest cable TV providers representing 95% of the U.S. cable industry lost 410,000 subscribers during the first quarter of the year (a significant drop from the 10,000 subscribers they gained during Q1 2016). Inversely, Netflix gained 8.3 million subscribers during the final quarter of 2017 alone, demonstrating a considerable threat to cable.
As consumers leave cable behind, many are turning to digital video content on mobile and social media. Younger generations, in particular, are watching TV less, with 18-24-year-olds watching an average of 12.72 hours of traditional TV a week during Q2 2017, compared to 15.08 hours during Q2 2016 (a decrease of over 15% in a year).
A multitude of factors played into the decline of cable and traditional TV in 2017. Here we’ll unpack the four overarching trends contributing to TV’s continual decline.
The widespread popularity of social media, as well as technological advances in mobile devices and new options for television viewing, has left many believing that traditional TV is on its way out. Digital technology has unquestionably reshaped the time we spend watching TV and the platforms we choose to watch it on.
Digital media grew tremendously in 2017 with digital ad spend at $209 billion accounting for 41% compared to TV’s 35%. In the last 12 months,
More than 4 billion people now use the internet, 3.1 billion use social media, and 5.1 billion use mobile devices. The growth in these three areas is diverting a subset of global consumers’ attention away from traditional TV.
Additionally, marketers are pouring more resources into digital advertising. A survey of 500 marketers found that during 2017, nearly 60% increased their marketing spend in the areas of social media, content, and website. This signals increasing interest in digital media, as many advertisers take a step back from TV advertising.
In 2017, the number of social media users worldwide grew by 20%, and the average person spent an hour and 46 minutes on social media per day. Social media provides an interactive form of entertainment that many consumers use as a substitute for traditional television.
Many social media sites took video-first initiatives more seriously in 2017, offering even more non-traditional television options. On August 9, Facebook announced Facebook Watch, a feature dedicated entirely to television shows on Facebook. Facebook is reportedly willing to spend upwards of $1 billion dollars on original Watch content and has already paid significant sums for music licensing.
As social media sites double down on both short and long-form content, users are turning to social media to satisfy their video content needs. As social video trends upwards, it is likely that consumer will further distance themselves from cable television.
The technological advancement and affordability of smartphones is another trend contributing to the decline of cable TV. Today, 95% of Americans own a cellphone and 77% own a smartphone.
Smartphones allow people to access mobile video everywhere, and as mobile companies develop phones that have bigger and higher resolution screens, many consumers are regularly using their phones to view video content.
Several apps exclusive to mobile are helping to drive this trend. Snapchat is one such example and maintains 166 million daily active users as of 2017. Its video-centric feature, Snapchat Discover, took notable steps towards mobile video in 2017 by signing NBC, ABC, A+E Networks, and others as partners.
Additionally, the growth in availability and popularity of unlimited data plans makes the use of smartphones for video streaming more feasible, upping the time users spend on their mobile devices. The increasing amount of time people spend using smartphones may be cutting into the time they previously spent watching traditional TV.
Aside from diverting attention away from traditional television, mobile devices also provide another means for watching online video apart from desktops and tablets. Netflix generated more revenue than any other app in Apple’s app store in 2017, suggesting that a large portion of its 117.5 million subscribers are watching on mobile. YouTube’s mobile app has also proved immensely popular, with 70% of its more than one billion users watching on a mobile device.
2017 was the first year in history in which watching downloaded or streamed video was more popular than watching traditional TV among U.S. consumers aged 45 and under.
Netflix leads the pack of streaming video providers and is predicted to hit 800 million subscribers by 2021. A recent study asked participants which they associated most with watching TV, Netflix or broadcast/cable TV networks. 72% of respondents between the ages of 16 to 24 chose Netflix, demonstrating an overwhelming preference for online video streaming and consumers’ shifting definitions of “TV”.
Additionally, as of 2017 more than half of U.S. consumers subscribe to a paid streaming video service.
The introduction of online video streaming services like Netflix, Hulu, and Amazon Video present a compelling alternative to cable TV. Consumers aren’t necessarily watching television less, but they’re choosing to access television content through online streaming services instead of cable subscriptions, effectively cutting the cord.