Ever since the television became a fixture in middle-class
homes starting in the 1950s and 1960s, TV has been an integral part of American
culture. While rabbit ear antennae eventually gave way to cable and satellite
subscriptions that provided more and more content and better quality, not a lot
changed in the past half-century.
However, in the past 15 years, change has defined the
industry. The rise of the internet and streaming services has given people a
lot of alternatives. Considering that the cost of cable has been steadily
rising over the years, people are increasingly saying goodbye to cable, a trend
known as cutting the cord.
But just how widespread is this phenomenon? As it turns
out, it has become a major driver of change in the entertainment industry, and
things are likely not going to change anytime soon. To demonstrate this, we've
compiled 14 of the most interesting cord cutting statistics we could find
related to cord cutting.
What is
Cord Cutting?
Someone becomes a cord cutter when they decide to drop
their cable TV subscription in favor of an alternative. The term comes from the
act of removing the physical cord, or "cable", from your home, although cord
cutters still rely on a cord in some form or another.
Cord cutting can also include dropping your home phone
service, but this is something you do in addition to dropping cable.
In general, when people cut the cord, they opt for one of
two alternatives:
·
Over the Air (OTA) Broadcasts - These
cord cutters turn back the clock a bit and choose to get their TV through an
antenna. Thought that technology was dead? Think again! It's still very much
alive, and as cable gets more and more expensive and people look for
alternatives, antennae are making a comeback. However, this remains the less
popular alternative to a paid cable TV subscription or the other option,
streaming.
·
Over the Top (OTT) Broadcasts - This is
the far more common version of cord cutting. It refers to when people ditch
cable in favor of alternatives that function over the internet, mainly to
streaming services such as Netflix, Hulu, Amazon Prime, etc. It can also refer
to live TV alternatives such as YouTube TV, Sling TV, Hulu Live, etc. To get
access to all the content that's available on the web, you would need to spend
more than most people spend on cable, but most people choose a few, share a few
others, and make do without whatever they're missing. The abundance of cable
alternatives is a big reason why so many people are cutting the cord.
OTT broadcasts are more popular because they dramatically
improve the TV watching experience, something OTA broadcasts don't do, despite
being the cheaper option.
Either way, the rising cost of cable and its perceived
drop in value is disrupting a market that has been a stronghold in the
entertainment industry for as long as most of us can remember.
Key Cord
Cutting Statistics in 2020
Now that we're clear on precisely what cord cutting is,
let's dig into some fascinating statistics that point to just how strong this
trend is and just how much potential it has to revolutionize the way we consume
television.
In 2019, 6.3 million people cut the cord
This brought the total up to 39.3 million, an 18.9 percent increase over the
year before. The number of cord cutters continues to rise every year, although
the rate of change is slowing down. To give you an idea, from 2017-2018, the
number of cord cutters grew by 32.8 percent.
Over the next few years, the number of people cutting the
cord is expected to grow, but as that number gets bigger, the year-over-year
change will get smaller.
Also, there is still a good block of people who remain
faithful to their cable subscription. The big question is if these loyalists
will be enough to keep the industry alive, or if the damages these companies
will incur will be too big for them to handle.
There Will Be More than 55 Million Cord Cutters By
2022
Even as the year-over-year increase in the number of cord
cutters slows down, we can still expect there to by around 55 million cord cutters in the United States by
2022, just two years from now. That's an additional 15 million as compared to
the number of cord cutters there currently are, a statistic that suggests this
trend is in no way shape or form slowing down any time soon.
Cable TV Penetration Will Fall to Below 60 Percent By
2030
Cable TV penetration rates refer to the percentage of
homes in the United States that have cable. Currently, despite all of the cord
cutting that has been going on, that number is around 81 percent, but it's expected to drop significantly
in the next decade to around 55 percent.
Think about that for a moment - in just ten years, there
will be a 50/50 chance that a home you walk into will have cable. Perhaps some
of you remember growing up and complaining every time mom and dad sent you to
your grandparents with the phrase, "But they don't even have cable!"
This is rapidly becoming the norm, although it's a bit
different since people without cable usually have one or more streaming
services to cover their entertainment needs.
35 Million Americans Have Never Had Cable
To be considered a cord cutter, you first need to have a
cable subscription and then cancel it. However, in the United States, some 35
million people have
never had a single cable subscription.
Most of these people are young people, either in college
or just out of it. Maybe they had cable growing up because they're parents had
it, but they have grown up with streaming. Once on their own and faced with the
prospect of paying their own bills, many of these individuals skip right over
cable and stick with a streaming-only approach, another way of saying they are
cord cutters.
This is a troubling trend for the cable industry. It
suggests that younger people don't even really consider it an option, something
that will make it rather difficult for companies to recruit new customers.
Netflix Has More Viewers than Cable and Satellite
Combined
Although cable is still in the lead in terms of the number
of subscribers, when it comes to viewers, Netflix is officially in the lead. For cable
companies, this is more bad good news, as it means there are lots of people out
there watching Netflix more than they are watching cable, and it's only a
matter of time before they realize they are paying for a service that they
don't really use.
What's even worse for the cable companies is that this
number doesn't include the number of viewers from other streaming services. If
we could add all these up, cable would be losing quite badly to the streaming
world in terms of number of viewers. And if in some future people can access
live TV and other events from somewhere other than cable, then we may be
looking at the death of the cable industry, something that seemed practically
impossible just a few years ago.
69 percent of People Have a Streaming Service
The vast majority of people now have some sort of streaming
service. As more and more of them come online, we can expect this
number to continue to grow, ramping up the competition for cable companies and
making it even more difficult for them to survive.
This stat is even more concerning for cable companies when
we consider how many live TV options are now available "over the top." Platforms such as YouTube TV, Hulu TV, Sling TV, and more make it easy for
viewers to get access to the live programming once exclusive to cable. As the
number of subscribers to these services continues to rise, we can expect the
number of subscribers to cable TV to continue to plummet.
Cable TV Ratings from Viewers Aged 18-49 Are Down 11
Percent
People who fall into the 18-49 age bracket are the ones
that cable companies care the most about; they are the most active consumers,
and most likely to respond to ads for new products. Since advertising is how
the networks that make cable possible earn money, that so many people from this
bracket are turning away from cable is quite troubling news for cable
companies.
Overall, ratings for cable TV amongst viewers aged 18-49
are down 11 percent from last year and 27 percent over the
past two years. There is no evidence to suggest this trend will reverse as more
and more young people turn to alternative sources, suggesting the cable
companies are losing their key demographic. This does not bode well for the
industry.
Nearly One-Third of People Over 50 Have Dropped Their
Cable Subscription
This should concern cable companies quite a bit, as people
over 50 should be the ones most willing to stick with cable. However, the
numbers suggest that even those over 50 are slowly getting fed up with the
rising costs and somewhat shady practices of cable companies.
Plus, people in this age bracket are no longer scared away
by technology, which may have been the case a few years ago when the digital
revolution was still new. For proof, consider that around two-thirds, 61 percent, to be exact, of people over 50 now rely
on TV content from online sources, mainly streaming. This represents an
increase of 27 percent over the past few years, which shows that cable
companies are losing ground with what was once one of their most loyal market
segments.
Why Do
People Cut the Cord?
As you can see, people are cutting the cord in droves, but
what exactly is driving this trend? Some of the motivations are obvious, but
others not so much. Here's a breakdown of some of the main reasons why people
are cutting the cord:
The Number One Reason People Cut the Cord is Price
If you currently have cable or recently had it, you're
probably aware that the price of your subscription has gotten, shall we say,
out of control. The average person pays around $107 per month for a
subscription, and the price has been going up steadily. In fact, it has been steadily outpacing inflation for the past 20 years.
Therefore it should be no surprise that 86.7 percent of cord cutters cite price as the top
factor that eventually drove them to cut the cord.
In the coming months and years, it will be interesting to
monitor this trend. At the moment, we have just a few streaming services to
choose from, but this is changing all the time as more and more companies get
into the streaming game. If a moment arises where we need to subscribe to ten
streaming services at $15 each to keep up with the latest in TV, then cutting
the cord will no longer be economical.
For the moment, the desire to save money is driving the
vast majority of cord cutters to once and for all say goodbye to their cable
subscription.
Just 34 Percent of People Are Happy With Value They
Receive From Their Subscription
No one likes to spend a lot of money, but if we do it,
it's nice to know we're getting a good value in return for the money we're
spending. With cable subscriptions, though, this simply isn't the case. Rising
prices have not translated into higher value, and most people look at their
cable TV lineups and see hundreds of channels they don't watch yet are forced
to pay for. This is obviously frustrating and has been a major reason
why people have decided to cut the cord.
40 Percent of Cord Cutters Do So Because of Streaming
The next primary reason people cut the cord is that they
prefer to use a streaming service, mainly Netflix, Hulu, Amazon Video, etc.,
regardless of price. Overall, just under half "40 percent" of cord cutters listed a preference
for streaming as their main motivation.
There are two main reasons for this. First, streaming
services typically don't have ads (the cheapest version of Hulu being the
exception). When we watch cable, we are subjected to countless advertisements,
and for some people, it's just too much. The losses we incur by dropping cable
(live TV and sports) is a small price to pay.
The other big reason is convenience. With streaming, you
can watch your favorite shows at any time. In most cases, you can even download
content to watch it offline, which is a great feature for those who spend a
good bit of time on-the-go, either traveling or commuting. This is something
you simply don't get with cable, and it's a big reason why people choose to get
rid of cable and stick exclusively to streaming.
A Quarter of Cord Cutters Have Opted for Free TV
Interestingly, around a quarter - 23 percent - decided to
cut the cord because they wanted to go for entirely free TV using an antenna.
Most of us probably thought that antenna TV was gone forever, but this is far
from the truth. In fact, for casual viewers, this is truly a great option.
All you need to do is spend $50-$200 for an antenna, hook
it up, point it in the direction of the signal you want, and boom! Free TV for
life. Of course, you get far fewer channels (although in some areas you can get
up to 50), and you sacrifice the ability to record shows and take them with
you. But you do get access to local programming and live sports/events.
In this sense, it's a great happy medium, and when people
learn about it, they often choose it as their primary alternative to a paid
cable subscription.
Original Programming is Not a Key Driver of Cord
Cutting
Although streaming companies such as Netflix, Hulu, and
Disney Plus are pouring money into their original programming to make
themselves more attractive alternatives, this is actually not a major reason
why people choose to drop cable and rely on streaming.
More specifically, just 7 percent of people said they
chose to cut the cord because most of what they watch on TV is original content
from a streaming service.
However, as these services continue to invest in content,
this may change. Original series on these platforms are already becoming quite
mainstream, and in recent years they have begun receiving recognition from
critics and awards organizations. As a result, you may start to see more people
switching over because they don't want to miss out on the new shows these
platforms are putting out. But at the moment, this is not a significant driver
of cord cutting.
52 Percent of Cord Cutters Say They Don't Miss a Thing
About It
What does cable have over streaming services?
Traditionally, live sports and local programming, and cable companies have been
banking on the idea that people would miss these two things so much that they
would stick with cable even as more and more alternatives become available to
them.
Overall, 23 percent of cord cutters say they do miss live
events, and 22 percent say they miss local/national news. However, more than
half, 52 percent, say they don't miss anything at all.
Of course, this number is taken from cord cutters, people
who may have already not had much interest in these things. What this suggests
is that when people cut the cord, they don't really look back. This means cable
companies should be prepared to say goodbye forever to those who decide to drop
their service in favor of alternatives.
Is Cable TV
Dead?
After reading all of these fascinating statistics, you
might be wondering: is cable TV dead? Well, that's a difficult question to
answer. The numbers we've presented here certainly give that impression, but
there are other factors to consider:
·
Growth in other parts of the world - Cable TV is struggling in Western Europe and North America, but it's growing in
Eastern Europe, Asia, Africa, and Latin America. In other words, everywhere else.
Of course, this growth is not being experienced by the same companies that
operate in Europe and the US, so these companies, or many of them, may die, but
cable TV as a medium probably isn't going anywhere anytime soon.
·
Service bundles - One thing that
certainly isn't going anywhere is the internet. At the moment, cable companies
are also the top internet service providers, and cable internet continues to be
one of the most reliable and widespread forms of high-speed internet. To entice
people to stick with cable, these companies often offer bundle deals with
internet that are hard to turn away. As long as this is the case, people may
continue to subscribe to cable even if they don't watch it much. It's also
possible that cable companies will use their position in the broadband market
to somehow revive cable.
·
Exclusive content - Another thing that
might keep cable alive is that there is a good deal of content exclusive to
cable. Whether or not this is enough to convince a large enough group of people
to ditch cable in favor of streaming completely remains to be seen, but it's something
keeping the industry alive.
For these reasons, it's unlikely we will see the complete
and total death of cable in the coming years. However, it's clear that the
industry must brace for continued losses and substantial changes. The numbers
we've provided you with here today help show just how big this trend has become
and demonstrate the trouble in which cable companies currently find themselves.
Will they turn it around? Only time will tell!
