June 2017 – The acceleration of cutting the cord is real. So real that a recent study shows that 13 percent of U.S. homes, or one out of six households across the country, that purchases broadband access is no longer buying a multi-channel pay-TV package from its cable company. In fact, the U.S. pay-TV industry lost about 762,000 video subs in the first quarter of 2017, a worst-ever result for the period, according to a new report from MoffettNathanson. Combined with newly emerging viewing options, the accelerated cord cutting trend is creating a quickly shrinking, soon-to-be extinct, pay-TV population.
A study by the Interactive Advertising Bureau found a 56 percent increase in consumers watching their favorite program on a Streaming Enabled “Smart” TV, or through the use of a Video Streaming Device such as Roku, Apple TV or an Amazon Fire Stick. The study also found that ownership of a smart TV and a video streaming device saw double digit increases between 2015 and 2017 among adults over the age of 18. In a similar study by Nielsen, millennials, a highly digital demographic and the largest generational group in the U.S., spend about 27% less time watching traditional TV (89% among 35+ vs. 66% among Millennials) and TV-connected devices, such as smartphones, laptops or tablets, are much more valuable to them. In fact, these younger adults account for nearly half (43%) of the U.S. cordless population (defined by a study by GfK MRI) as those who have never had cable, satellite, or fiber-optic cable service and those who have cut the cord.
Clearly, societal viewing behaviors, the television ecosystem and the broadband environment is organically evolving. However, as the landscape shifts, so must the business models. Tremendous opportunities lie within the ability to monetize the new trends and align growing revenues with growing demand on broadband networks. New digital-only providers, live TV programming, and slimmer bundles are some of the newly emerging efforts on the content and delivery side. However, significant revenue can also be captured by optimizing the exponential data growth phenomenon that is currently taking place on broadband networks through improving the user experience of existing subscribers. To this end, operators must discover and truly understand the usage behaviors and respond accordingly. The ability to view usage demands and then transform the data into meaningful revenue is not only critical to an operator’s relevance, but the difference between surviving and thriving in the broadband landscape for years to come.