Several studies have been released in recent months that suggest that “cord cutting,” or dropping traditional pay TV service in favor of Internet-based alternatives, is no longer only a niche phenomenon.
Research from the New York Times presented at an Oct. 10 “audience monetization” summit shows that as many as one-third of “millennials” (people born between the early 1980s and early 2000s) watch no broadcast TV whatsoever. Instead, the research shows that these people “mostly” watch video online.
Popular places where millennials watch online video include dedicated video-hosting platforms like YouTube, social media platforms like YouTube, and news websites. The overwhelming reason why people watch online video, the NYT survey concluded, was “to be entertained.”
As many as 2.7% of current pay TV subscribers are considering dropping their subscription in the next year, according to a Magid study presented Sept. 24 at a Goldman Sachs-hosted conference in New York. (Magid is a research and consulting firm.) That’s up from 2.2% in 2012 and 1.9% in 2011.
People who discontinue their pay TV subscription are commonly called “cord cutters.” Similar groups include “cord nevers” (young people who never sign up for a pay TV subscription) and “cord shavers” (people who retain pay TV service but opt for a less expensive tier).
More than 90% of American households pay for a TV subscription of some kind.
“Cord-cutting used to be an urban myth. It isn’t anymore. No, the numbers aren’t huge, but they are statistically significant.” Craig Moffett, Moffett Research
Moffett, a well-known television industry analyst, released a report in August 2013 saying that the pace of people getting rid of their pay TV subscription is accelerating. Pay TV subscriptions declined 0.3% in 2012, according to Moffett.
Cable companies have attempted several strategies to combat the lost revenue caused by cord cutting, including raising the price of broadband or charging for equipment that had previously been free to use.
John Malone, the current chairman of Liberty Media and former CEO of early cable TV provider TCI, said Oct. 10 that cable companies should work together to create an Internet-based Netflix rival, in part to help lower programming acquisition costs. Malone was speaking at Liberty’s annual investors’ conference.