AS CUSTOMERS SAY “BYE” INSTEAD OF “BUY,” WHAT CAN CABLE COMPANIES DO TO COMBAT THE CORD-CUTTING EXODUS?
The days of every household paying more than $100 per month for cable or satellite television service are long gone.
According to Business Insider, in the final quarter of 2018, a major media company lost over 400k traditional and over 200k OTT customers. The trend toward “cutting the cord” has escalated every year recently, with millennials’ behavior being the driving reason for the shift.
A mid-2018 survey conducted by Magid Advisors found that roughly 8 percent of pay-TV subscribers planned to cancel their existing TV subscription service in the next 12 months, an increase over the 6 percent who said the same in 2017 and 5.7 percent in 2016. The rate was even higher with millennials, with 14 percent of this age group – defined between 21 and 40 years old – planning to cancel their paid-TV subscription in the next 12 months.
Consulting firm cg42 predicted last year that more than 5 million consumers in the United States would cut the cord, a number that would have resulted in $5.5 billion in lost revenue.
The gut reaction to this data would be that millennials are cheap and are trying to save a buck or two. But saving money is far from the main reason why millennials are saying goodbye to pay TV.
Millennials See No Need for Cable
According to the Magid survey, millennials said the top reason for cancelling their pay-TV subscriptions was that they just don’t see a need for it anymore. That’s because this age group, especially, gets enough of what it wants from streaming services such as Hulu, Netflix and Amazon Prime.
Those three leading streaming services have continued to pump money into the original content they produce, giving consumers a viable alternative to traditional cable or satellite TV. For those who still desire the more traditional network sitcoms, Hulu provides that content as well – to a whopping 25 million subscribers.
In addition, some cable companies are even offering streaming services such as HBO Now, Showtime OTT and CBS All Access, making a subscription to traditional cable or satellite TV obsolete to some.
In fact, because most millennials are going to subscribe to streaming services such as Hulu, Netflix and Amazon Prime anyway, they are likely to see pay-TV services as a luxury add-on, not the other way around.
Sports and News Are Keeping Some People Around – For Now
One of the reasons even more people in other age groups haven’t cut the cord is because doing so would take away live sports and local news. Late last year, companies Adobe and Telaria released a white paper called “Inside the Minds of Cord-Cutters and Cable-Keepers” that examined the behaviors of people who subscribe to pay-TV services and what is keeping them around.
The white paper outlined a few very telling statistics:
- Only 40 percent of respondents said they were happy with the price they paid for their pay-TV subscription.
- 30 percent said they would cut the cord if they’d be able to stream live sports, events and news.
- 55 percent said they are confused by the alternative options to pay-TV available to them.
These statistics paint a bleak picture for the cable and satellite companies, especially if:
- Consumers get fed up with the price they’re paying
- Streaming services begin to offer sports, events and news
- Consumers get more knowledgeable about their options
What Can the Cable and Satellite Companies Do?
If there’s one bright spot to all this for the cable and satellite providers, it’s that there’s one thing that binds cord cutters and non-cord cutters alike – the need for expanded, ever-increasing high-speed internet. Luckily for these companies, they are also the main ones that provide this high-speed internet service.
While a continued drop in revenue for pay-TV service is likely, more and more consumers will demand increasingly high-speed internet service that will allow them to stream high-definition video to any device – and multiple devices – in their home and on the road.
In fact, by continuing to build out their high-speed internet infrastructure, the cable and satellite giants may be able to simply shift the focus of their revenue generation even more from pay-TV to high-speed internet, rather than having that revenue disappear altogether. Comcast has done just this, as it’s added 1.4 million new internet customers in each of the last two years, and its internet customers now outnumber its video customers.
So, while the behaviors of traditional pay-TV subscribers are changing – and as millennials are aging into the top purchasing demographic – it doesn’t need to spell the complete and utter end to cable and satellite companies across the country.
Filed under: UX, User Experience, Design, User, Customer, Users, Strategy, Millennial, Cord-cutting, Netflix, Hulu, Amazon, AT&T, DirecTV, HBO, Satellite, TV, CBS, Showtime, Cable, Pay, Pay-TV, 2019top20