Analyst: Pay-TV to Lose 50% of U.S. Subs by 2024

Cord-cutting among pay-TV households in the United States is real and growing — even during a pandemic. New data from eMarketers finds that 33% of all domestic pay-TV homes will cut the cord by 2024 — with 31.2 million households dropping either cable, satellite or telecom service this year. And 6.6 million households will cancel their pay-TV subscriptions.

“Consumers are choosing to cut the cord because of high prices, especially compared with streaming video alternatives, analyst Eric Haggstrom said in a statement. “The loss of live sports in [the first half of the year] contributed to further declines. While sports have returned, people will not return to their old cable or satellite plans.”

The ongoing secular shift toward over-the-top video leaves about 77.6 million domestic households with cable, satellite, or telecom TV in 2020, down 7.5% year-over-year and the biggest drop ever, according to eMarketer. The tally is down 22.8% from pay-TV’s peak in 2014. By the end of 2024, fewer than half of U.S. households will subscribe to a pay-TV service.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

The loss of viewers is having a major hit to traditional TV ad spending. Total spend will drop 15% this year to $60 billion, the lowest the industry has seen since 2011.  And while it will rebound some next year, eMarketer contends TV ad spending will remain below pre-pandemic levels through at least 2024.

Ending a Relationship

It had been a long time coming.

Cable TV had been a big part of our lives for decades, a constant entertainment companion, but being together so much during the pandemic took a toll on the relationship. Suddenly, those ever-expanding commercial breaks seemed endless after watching ad-free streaming services such as Netflix, Disney+ and Amazon Prime. Even Hulu, which we watched with ads, served up a more palatable break — and conveniently offered a little countdown to tell us when it would be over.

We picked up YouTube TV for live programming, and that was it. The cable relationship was over. We cut the cord.

Apparently, we are not alone. A Roku survey found one in three U.S. households are cord cutters, and many have decided to make the change in recent months, citing the pandemic, the abundance of free AVOD services, and lack of live sports, among other factors.

Aside from the learning curve on how to work the remote to get to the channel or program I want, it’s been a smooth divorce. Kicking cable out also gave us more space. We gained some shelves by ditching the boxes.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

So far, I don’t miss the old companion. I haven’t found a program or channel that I previously had on cable that I can’t find or approximate on our new streaming combo. Sure, I don’t have the convenient clock on the box to see the time. It takes a little more effort to figure out what I want to watch among all the new choices, but, honestly, I don’t miss cable.

It was the growing relationship with our SVOD services, the new-and-improved version of live TV on YouTube TV and the cable bill’s increasing drain on our finances that drew us away.

When we announced the decision to end it, my daughters looked up from their phones and sarcastically said, “Oh, no! We watch so much cable.”

Goodbye old friend.

Roku Says Nearly 1 in 3 U.S. TV Households Have Cut the Cord

Roku July 21 reported that about 32% of U.S. TV households do not have a traditional pay-TV subscription (cable, satellite, telecom), while another 25% of households identified as “cord shavers” scaled back their service during the coronavirus pandemic. When asked about the intent to drop pay-TV in the next six months, 45% of the latter households said they were likely to do so.

Citing data from separate surveys of 7,000 Americans ages 18 and over in March, followed by 2,000 Americans ages 18 and over in May to understand changes amidst the pandemic, Roku found primary drivers for pay-TV termination to be the pandemic and lack of live sports.

“While we entered 2020 with significant momentum around cord cutting, we’re now seeing that the pandemic and the pause of live sports has caused consumers to rethink how they access home entertainment and what they are willing to pay,” Matthew Anderson, chief marketing officer, said in a statement.

Anderson said the abundance of free ad-supported VOD content, free trials to low-cost are contributing to a redo in home entertainment consumption.

Survey respondents said they saved about $75 per month dropping pay-TV, with some of the saving earmarked for SVOD services.

“The vast majority of [respondents] agreed that they are satisfied with their decision and wish they had cut their pay-TV service earlier,” Anderson said.

Value is an important factor in driving cord cutting. Nearly half of all U.S. TV household respondents said they have been watching more, free ad-supported TV during the COVID-19 pandemic than they did before. In addition, 40% of recent households that dropped pay-TV said that access to free trials and extended free trials to premium subscription services helped convince them to cut traditional pay TV service.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Roku, which helped Netflix launch the subscription streaming video-on-demand market in 2007, offers a platform for third-party SVOD services, in addition to The Roku Channel branded AVOD platform.

Roku found less than 20% of cord-cutting households said they would re-subscribe to pay-TV when live sports returns. Instead, 31% said they were likely to subscribe to a live sports streaming service, such as ESPN+ and fubo TV. More than half (52%) of traditional and “cord shaver” households said they are likely to reduce their pay-TV package if televised live sports does not return.

Streaming Service fuboTV Q1 Revenue Jumps 78%

Streaming service fuboTV posted revenue for the first quarter of $51 million, a 78% increase compared with the first quarter of the prior year, driven by growth in subscribers, subscription average revenue per user and advertising sales, according to unaudited results from owner FaceBank.

Facebank completed its merger with fubuTV April 1.

Subscription revenue in the first quarter ended March 31 increased 74% year over year to $46.4 million. Advertising revenue in the first quarter increased 120% year over year to $4.1 million. Total streaming hours by fuboTV users (paid and free trial) in the first quarter increased 120% year over year to 107.2 million hours.

Monthly active users watched 120 hours per month on average in the quarter, an increase of 52% year over year.

Paid subscribers at quarter’s end totaled 287,316, an increase of 37% year over year. Average revenue per user per month was $54.16, an increase of 25% year over year.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

“We believe fuboTV is at the forefront of the streaming revolution and has a significant advantage not only over peers in the vMVPD space but also over traditional cable television,” wrote fuboTV CEO David Gandler in a letter to shareholders. “We offer cord-cutters a total cable TV replacement with top Nielsen-ranked sports, news and entertainment channels. What sets fuboTV apart is our internally built tech stack that keeps us innovating ahead of the industry. With premium features like 4K streaming, personalized live TV recommendations and recent app updates that integrate live video into the product experience, we believe a fuboTV subscription offers consumers the best value of any other live TV streaming platform. We believe consumers will continue to choose streaming over traditional pay television because of this more personalized, premium viewing experience that is also less expensive.”

The company has added $46 million in equity funding from institutional and private investors since closing the merger, including $20 million on July 2 from Credit Suisse Capital through a common stock issuance at $9.25 per share.

COVID-19 a Push to Cut the Cord

During the pandemic, consumers are sitting at home looking for more visual entertainment than ever before — and evaluating their options. Happily, the disc has gotten a lift as consumers realize the value of the stalwart format, while digital transactional retailers have gained in part by offering premium VOD titles that bypassed or left theaters early.

But, in addition to theaters, one entertainment option that may suffer from COVID-19 is traditional cable, satellite or telco pay-TV. A study from TDG Research found that as virtual MVPD services re-create the offerings of traditional pay-TV, consumers are increasingly seeing less of a need for it. “Most OTT pay-TV services now provide a full complement of both broadcast and cable channels” said analyst Michael Greeson.

Indeed, I am finding it increasingly annoying to sit through commercials on cable that last longer than ads on any AVOD offering and don’t include that convenient countdown to tell you when the torture will end. After scrolling through the numerous cable channels and finding absolutely nothing I want to watch, I am jumping to smart-TV options more and more. The family wants to cut the cord, and the time may be right.

As TDG noted, vMVPD leaders Hulu Live TV and YouTube TV offer the four major broadcast networks, channels that previously helped tie consumers to traditional pay-TV.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

It’s ultimately a flight to quality and value, the same things that have bolstered the transactional home entertainment business since its beginning.

Roku: Video Streamers to Surpass Pay-TV in Five Years

Roku Sept. 18 released a new study that claims about 60 million TV households are expected to access video on their TV mainly through streaming within the next five years.

If this happens, for the first time, video streamers would surpass traditional pay-TV viewers.

Roku, which co-invented the SVOD market with Netflix in 2007, said its second annual comprehensive study on the TV household landscape included 7,000 U.S. adults age 18 and over, and 12,000 Roku account-holding U.S. adults age 18 and over.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

The Los Gatos, Calif.-based company suggests 2 million Americans have ‘cut the cord’ so far in 2019, moving from traditional pay-TV (cable or satellite television).

That’s after 3.5 million people gave up pay-TV video in 2018. Consumers who are already streaming include cord-cutters, TV households that previously had pay-TV; cord-shavers who may pay for traditional cable but have reduced their package in the last few years; and cord-nevers, those who have never had pay-TV.

Roku claims that a new generation of cord-cutters has emerged. One whose viewing behavior more closely mirrors that of average mainstream TV viewers, but seeks out better value and choice in how they consume TV.

Roku contends that 82% of all cord-cutters who participated in the study are extremely satisfied with their decision to cut the cord while 92% of Roku customers shared the same sentiment.

Other survey findings include:

  • 34% of those surveyed seek to switch to lower cost options in the next 6 months.
  • 98% of Roku cord-cutters say they’ll never go back.
  • 2/3 of all cord-cutters say they wish they would have cut the cord sooner.
  • 73% of all video streamers in the Roku study watch AVOD and 45% watch more free TV than any other streaming video option.
  • 74% say streaming is more convenient than pay-TV services and 89% report that using a streaming device is very easy.

“This report shows there is a huge, new generation of streamers who enjoy live and free TV and are extremely satisfied with the decision to watch TV without cable or satellite,” Matthew Anderson, chief marketing officer, said in a statement “Half of Roku’s U.S. customers don’t have traditional cable and satellite subscriptions and they enjoy the value, ease and breadth of content we offer them. The Roku study shows that the shift to streaming is more popular and growing faster than ever before.”

Parks: Broadband Cord-Cutters Switching to Mobile Video

Broadband households in the United States likely to cut the pay-TV cord in the next 12 months are switching to mobile video, according to new data from Parks Associates.

The Dallas-based research firm said broadband households cutting the cord in the next 12 months watch more than six hours of video content on their mobile phone a week, compared to 2.5 hours among all domestic broadband households.

Parks said the market trends have spurred Comcast and Charter to introduce mobile services as a way to extend their service-based product portfolios.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

“Roughly 10% of broadband subscribers are likely broadband cord-cutters, with half of them highly likely to make the change in the next 12 months,” principal analyst Brett Sappington said in a statement. “Many are satisfied with their current provider overall, but these subscribers are aware of the other options available to them and could become actual cord-cutters if their current service does not continually meet their needs.”

The research notes that 66% of broadband households currently subscribe to a cable Internet service, 33% subscribe to DSL or fiber optic or use mobile data services. Verizon, AT&T, and Frontier are the largest providers of DSL and fiber-based fixed-line services.

“Potential broadband cord-cutters rely on their mobile devices for entertainment,” Sappington said. “They are significantly more likely to watch live video content via mobile, including live TV broadcasts and livestreaming, averaging an hour more per week each compared to average broadband households. As 5G mobile and 10G fixed broadband services start to deploy, the substantial performance improvements will be attractive to this segment of subscribers, which will drive many providers to match these offerings in order to achieve parity in competition and messaging.”

U.S. Broadband Households Who Watch Mobile Video More Likely to Cut Cord

U.S. broadband households highly likely to cut the cord in the next 12 months watch more than six hours of video content on their mobile phone a week, compared to 2.5 hours among all U.S. broadband households, according to research from Parks Associates.

The report Examining Broadband Cord Cutters notes that fixed broadband providers that do not offer mobile services are particularly susceptible to cord-cutting among their current subscribers. These market trends drove U.S. cable operators Comcast and Charter to introduce mobile services as a way to extend their service-based product portfolios, according to the report.

“Roughly 10% of broadband subscribers are likely broadband cord-cutters, with half of them highly likely to make the change in the next 12 months,” said Brett Sappington, senior research director and principal analyst, Parks Associates, in a statement. “Many are satisfied with their current provider overall, but these subscribers are aware of the other options available to them and could become actual cord-cutters if their current service does not continually meet their needs.”

Subscribe HERE to the FREE Media Play News Daily Newsletter!

The research notes that two-thirds of broadband households currently subscribe to a cable internet service, three in ten subscribe to DSL or fiber optic, and one-third use mobile data services. Verizon, AT&T, and Frontier are the largest providers of DSL and fiber-based fixed-line services.

“Potential broadband cord-cutters rely on their mobile devices for entertainment,” Sappington said in a statement. “They are significantly more likely to watch live video content via mobile, including live TV broadcasts and livestreaming, averaging an hour more per week each compared to average broadband households. As 5G mobile and 10G fixed broadband services start to deploy, the substantial performance improvements will be attractive to this segment of subscribers, which will drive many providers to match these offerings in order to achieve parity in competition and messaging.”

Research: OTT Revenue Forecast to Reach $22 Billion in 2019

Based on 66 OTT providers, led by Netflix, Hulu and Amazon, U.S. OTT access revenue grew 37% to $16.3 billion in 2018 and is forecast to reach $22 billion in 2019, according to a new research from Convergence Research.

The research firm has released two new reports, “The Battle for the American Couch Potato: OTT and TV” and “The Battle for the American Couch Potato: Bundling, TV, Internet, Telephone, Wireless.”

Still, U.S. TV subscriber average revenue per user (ARPU) is still forecast to be three times U.S. OTT subscriber household ARPU in 2021.

The firm estimates 2018 U.S. cable, satellite, telco TV access (not including OTT) revenue declined 3% to $103.4 billion in 2018 and forecasts 2019 will see a similar decline. Also, 2018 saw a decline of 4.01 million U.S. TV subscribers and 2017 a decline of 3.66 million, according to the firm, which forecasts a decline of 4.56 million TV subs for 2019. The U.S. TV subscriber
base will decline 5% in 2019, from a decline of 4% in 2018, according to the firm’s estimates.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

By the end of 2018, the firm estimates 30% of households did not have a traditional TV subscription with a cable, satellite, or telco TV access provider, up from 26% at the end of 2017. The firm forecasts that number to reach 34% of households by the end of 2019. Convergence Research estimates 2018 saw almost 5 million cord cutter/never household additions.

The firm projects that a number of OTT plays, including large and niche, will fail due to insufficient subscriber traction, cost and competition, noting major programmers continue to accelerate their direct-to-consumer drive, including Disney and WarnerMedia. Other developments noted by the firm include:

  • Hulu spends more on content per sub than either Amazon or Netflix and continues to discount (notably with Spotify);
  • CBS/Showtime’s OTT subscriber trajectory has been faster than expected;
  • Discovery has backed and supplied Philo, gone live with Hulu, Sling and YouTube TV, and will be launching an OTT service with the BBC;
  • NBC Universal will be launching an OTT service in 2020;
  • and Viacom has backed and supplied Philo and others, acquired Pluto and Awesomeness TV and is producing for Amazon and Netflix.

Research: 30 Million Americans Have Never Paid for TV Programming

While Hollywood and media companies focus on “cord cutters” – adults who give up their cable or satellite TV subscriptions – new data from MRI – Simmons suggests millions of Americans have never paid for a traditional TV connection.

About 31 million U.S. consumers – 12% of the adult population – are so-called “cord-nevers” – up 9% from 2017. With a median age of 33, the demo’s average household income has risen by 27% over the last 2 years, from $41,500 to $52,800.

Subscribe HERE for FREE Daily Newsletter!

Among cord nevers, 27% – about 8 million adults – say they plan to sign up for a pay-TV service in the next six months. Some 70% of these consumers say they will subscribe to a traditional (cable, fiber optic, or satellite) service, while 30% – 41% of 18-to-34 years olds – expect to acquire a streaming TV package, such as Hulu with Live TV, DirectTV Now, or Sling TV.

Why are millions of Cord Nevers looking to connect to pay-TV service? The reasons vary dramatically by age.

MRI’s research – based on roughly 24,000 in-person, in-home interviews – found the option to channel surf is a big motivator for those in the 35-to-49 and 50+ groups, while the youngest adults (18 to 34) are seeking access and the ability to watch and find shows easily.

Top reasons cited why “cord nevers” are looking to pay for TV access:

18+ 18 to 34 35 to 49 50+
I want to be able to channel surf 27%* 18%

(67)

46%

(168)

31%

(113)

I can get a good deal on a TV package 23% 30%

(131)

10%

(45)

15%

(67)

It is easier to watch/find shows 21% 29%

(138)

7%

(35)

11%

(53)

It is the only way to watch the TV networks I want to watch 18% 16%

(86)

23%

(122)

22%

(121)

It has better access to shows I want to watch 18% 23%

(126)

11%

(63)

9%

(50)

It is worth the expense 17% 16%

(92)

26%

(151)

4%

(22)

I want to watch live news 17% 14%

(79)

30%

(172)

6%

(37)

I want to watch live programming when it airs 16% 14%

(87)

21%

(134)

14%

(89)

I want to have a DVR service 14% 9%

(65)

26%

(185)

12%

(82)

“Young people used to say that, as soon as they got their first well-paying job, they would sign up for the full suite of traditional TV services,” Karen Ramspacher, SVP innovations & insights at MRI-Simmons, said in a statement. “Today, there are many more options for connecting to video content – so competition for these subscription dollars is fierce. As they grow in numbers and wealth, today’s ‘cord nevers’ definitely represent an opportunity for content providers – but understanding the Nevers’ underlying motivations is essential to targeting them effectively.”