Cord-Cutting Explodes: 22 Million U.S. Adults Will Have Cancelled Cable, Satellite TV by End of 2017
Cord-Cutting Explodes: 22 Million U.S. Adults Will Have
Cancelled Cable, Satellite TV by End of 2017
Research firm eMarketer cuts TV ad-spending forecast on
accelerating pay-TV declines
SEPTEMBER 13, 2017 | 03:00AM PT
Winter is here for cable and satellite TV operators.
American consumers are cancelling traditional pay-TV
service at a much faster rate than previously expected, according to research
firm eMarketer.
In 2017, a total of 22.2 million U.S. adults will have
cut the cord on cable, satellite or telco TV service to date — up 33% from 16.7
million in 2016 — the researcher now predicts. That’s significantly higher than
eMarketer’s prior estimate of 15.4 million cord-cutters as of the end of this
year. Meanwhile, the number of “cord-nevers” (consumers who have never
subscribed to pay TV) will rise 5.8% this year, to 34.4 million.
“Younger audiences continue to switch to either
exclusively watching [over-the-top] video or watching them in combination with
free-TV options,” said Chris Bendtsen, senior forecasting analyst at eMarketer.
“Last year, even the Olympics and [the U.S.] presidential election could not
prevent younger audiences from abandoning pay TV.”
Overall, 196.3 million U.S. adults will have traditional
pay TV (cable, satellite or telco) this year, down 2.4% compared with 2016,
eMarketer predicts. By 2021, that will drop to 181.7 million, a decline of
nearly 10% from 2016. The number of pay-TV viewers 55 and older will continue
to rise over the next four years, while for every other age cohort the
subscriber tallies will decline.
By 2021, the number of cord-cutters will nearly equal the
number of people who have never had pay TV — a total of 81 million U.S. adults.
That means around 30% of American adults won’t have traditional pay TV at that
point, per eMarketer’s revised forecast.
There’s a caveat on these numbers: eMarketer’s estimates
for pay-TV viewers do not include “virtual” internet TV services, such as Dish
Network’s Sling TV, AT&T’s DirecTV Now, Hulu’s live TV service, or YouTube
TV. But industry analysts say over-the-top TV subscription services so far have
not offset declines in traditional pay television. Moreover, the cheaper OTT
packages typically include fewer channels, so the growth of “skinny” TV bundles
implies net household losses for many cable networks.
Seeing the writing on this wall, several TV programmers
have launched or are prepping direct-to-consumer streaming services themselves.
CBS in 2014 launched All Access, while Disney has set early 2018 for the debut
of a no-cable-needed ESPN OTT package (although that will exclude NFL and NBA
games). In addition, five media companies — A+E Networks, Viacom, Discovery,
Scripps Networks Interactive and AMC Networks — reportedly have joined forces
to create a non-sports streaming bundle of cable programming to be priced at
under $20 per month.
For the TV biz, there’s another worrisome trend: People
are watching less traditional television. For the first time, in 2017 average
TV viewing in the U.S. is expected to drop below 4 hours per day, eMarketer
predicts.
Average time spent watching TV (excluding digital) among
American adults will drop 3.1%, to 3 hours 58 minutes this year. Digital-video
consumption, meanwhile, continues to climb. U.S. adults will consume 1 hour 17
minutes of digital video per day on average in 2017 (excluding time spent
viewing video on social networks), up 9.3% year over year, according to
eMarketer.
With the U.S. pay-TV base eroding faster than anticipated
and average TV viewing time dropping, eMarketer cut its TV ad-spending forecast
for 2017 by a little over $1 billion.
This year, TV advertising will increase just 0.5%, to
$71.65 billion (versus the firm’s previous $72.72 billion forecast). As a
result, the TV sector’s share of total U.S. media ad spending will drop to
34.9% (vs. 36.6% in 2016) and is expected to fall below 30% by 2021.
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