It is not a pleasant time to be a cable company. Decades of regional monopolies are being swept away, leaving us with — the horror! — actual competition. Prices on streaming bundles are so low that companies are actually struggling to make money on the $40-a-month skinny services. Any time margins are so low that telecoms giants are complaining, you know that it’s good for consumers.
Unsurprisingly, people are keen to ditch cable. While traditional pay TV is still the biggest distribution method by far, a pair of new studies out this week suggest that cord-cutting is about to hit new highs. Record cord-cutting numbers are absolutely nothing new, but the interesting thing is that year after year, cord-cutting numbers are consistently outpacing analyst expectations.
Let’s start with data from New York-based eMarketer, which sources its data by aggregating third-party sources. For the pay TV forecast, numbers come from two dozen data sources, including big names like Nielsen, Deloitte, Kagan, GfK, Parks Associates, and MoffettNathanson. In short, it’s a comprehensive overview of what industry experts think.
The latest report from eMarketer suggests that cord-cutters, defined as people who ditch traditional pay-TV and don’t resubscribe, will climb 32.8 percent to 33 million adults by the end of 2018. That’s an obviously huge leap from the 24.9 million cord-cutters reported at the end of 2017. That number was itself more than eMarketer’s estimate for 2017, which was 22 million.
It doesn’t take a genius to work out where the subscribers are going. Over-the-top (OTT) services are booming, with eMarketer estimating that 147.5 million people watch Netflix every month in the US alone. Netflix is chased by Amazon Prime Video (88.7 million), Hulu (55 million), HBO Now (17.1 million), and Sling TV (6.8 million).
As for why people are leaving services, a new survey of over 3,000 Americans from cg42 provides some insights. The study’s author Stephen Beck spoke to Marketwatch, and the message seems clear:
Accelerating the cord-cutting trend is a lack of brand loyalty borne out of frustration, said Beck. Survey respondents were asked to rank their top frustrations by pay-TV provider. Beck found customers were most frustrated with being unable to get what they considered competitive or “reasonable” rates, new customers getting better deals than existing ones and being “nickeled and dimed” with multiple fees and charges.
The trend is moving firmly away from pay TV, as cord cutters find doing so means hefty savings. Cord cutters saved an average of $85 each month after leaving pay TV, according to survey responses, and of those who left , 79% said they were happy with their decision to cut the cord. Only 5% said they regretted their decision and would go back to pay TV.
At this point, it doesn’t seem as though there’s really any way cable TV survives in its current condition. The decline will only be accelerated by the move away from coaxial cable set-top boxes, and towards internet-connected set-top boxes, like the Apple TV or Roku stick. They’re simpler and cheaper for cable companies to deploy, and once the reliance on the coaxial set-top box fades away, so will the current geographical restrictions.