Cord-cutting isn’t just happening, it could be escalating

Cord-cutting has been a thing for a long time. But some new consumer research suggests an escalating aversion to traditional pay-TV service.

As the exodus from TV delivered by cable and satellite continues, the segment of U.S. homes relying on video delivered over broadband is on the rise, according to a new survey released Friday at the VidCon video show in Anaheim, California.

About 8 percent of pay-TV subscribers who participated in a Magid Media Futures survey of 2,400 online users, ages 18 to 64, conducted June 4-12 said they were extremely likely to cancel their pay-TV service and not get another one in the next 12 months.

That’s higher than the 6 percent of subscribers who planned to cut the cord in 2017 and 5.7 percent in 2016.

“We have been saying this for five or six years now, and it’s rising again,” said Mike Vorhaus, president of research and consulting group Magid.

“This is unstoppable. People are going to cut the cord. The $100 (pay-TV) package is going to be under deep distress.” Vorhaus presented the research Friday.

Millennials are more likely to cut ties with their cable or satellite provider, the survey found, with 14 percent of 21 to 40 year olds expressing such a preference. That’s potentially a big hit for traditional TV providers who want to hook potential customers at a younger age. “Right when you are forming a household, renting an apartment or getting a house, those people are key for the cable guys,” Vorhaus said.

Another bad signal for traditional pay-TV providers: About 10 percent of live sports enthusiasts who subscribe to pay TV said they are very likely to cut the cord, too.

According to Vorhaus, live sports has been seen as a key reason consumers stick with pay TV. But this trend could be a sign that more traditional sports such as baseball, football and basketball have an aging audience, he says, while younger consumers, who are more likely to be cord-nevers or cord-cutters, prefer soccer, UFC and eSports – all more likely to watched via broadband.

Overall, the percentage of homes with pay TV has fallen to about 76 percent , down from 86 percent in 2013, the Magid survey found.

Major pay-TV providers have about 88 million subscribers after having lost 305,000 subscribers in the first quarter of 2018 and 1.5 million last year, according to Leichtman Research Group. Average bill: about $106. Another 3.8 million viewers subscribe to broadband-delivered TV services such as Sling TV, owned by Dish Network, and DirecTV Now, owned by AT&T.

Boomers (ages 53 and up) were more likely to have pay TV, though their numbers are on the decline, too. About 81 percent of the group have a pay TV subscription, down from 87 percent in 2014, the Magid survey found. Seventy-three percent of millennials have pay TV, down from 83 percent in 2014, Magid says.

Homes with broadband now number about 96.5 million, up from 93 million at the end of 2016, according to Leichtman.

While traditional live pay TV remains the most-watched medium – 38 percent of survey respondents watch three or more hours daily – about 20 percent stream video to a connected TV. Millennials are more likely to stream video and 37 percent watch live streaming video at least once  a day, compared to 12 percent of all survey participants.

The growing appetite for broadband-delivered video has lead to disruption across the entertainment ecosystem. Consumers are expected to spend $13 billion on video-streaming subscription services in 2018, 39 percent more than in 2017, according to the Consumer Technology Association. And there are more video services delivered on the Net, about 300.

These seismic changes are behind Disney and Comcast’s bidding war for 21st Century Fox’s cache of entertainment assets up for sale – including its TV and movie studios and 30 percent stake in Hulu. And it was the impetus for AT&T’s acquisition of Time Warner, approved last week by a federal judge.

AT&T on Thursday said it would launch WatchTV, a consumer video service with more than 30 live streaming channels and more than 15,000 TV shows and movies on demand – free to some unlimited wireless customers or $15 monthly for others including non-AT&T customers.

WatchTV fits the description of a skinny bundle – a trimmed-down package of channels, as opposed to a large 100- to 200-channel bundle. And about 55 percent of those who participated in the Magid survey are interested in subscribing to a skinny bundle, up from 44 percent last year; 35 percent are very interested.

“The skinny bundle may actually be the solution for the traditional cable guys,” Vorhaus said, “That may be how they fight back.”

Read the entire article here.

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