A cord-cutting study showed that 33 million adults will stop paying for cable or satellite TV in 2018.
This year, the number of cord-cutters in the U.S. -- consumers who have ever cancelled traditional pay-TV service and do not resubscribe -- will climb 32.8%, to 33.0 million adults, according to new estimates from research firm eMarketer, Reuters reported. That's compared with a total of 24.9 million cord-cutters as of the end of 2017, which was up 43.6% year over year (and an upward revision from eMarketer's previous 22 million estimate).
That said, even as the traditional pay-TV universe shrinks, the number of viewers accessing over-the-top, internet-delivered video services keeps growing. About 147.5 million people in the U.S. watch Netflix at least once per month, according to eMarketer's July 2018 estimates. That's followed by Amazon Prime Video (88.7 million), Hulu (55 million), HBO Now (17.1 million) and Dish's Sling TV (6.8 million).
Other OTT services have been on the rise, too -- including AT&T's DirecTV Now, Google's YouTube TV and Sony's PlayStation Vue -- but eMarketer didn't provide estimates for those.
One of the issues in how eMarketer tracks the pay-TV market is that it's estimating total number of individual viewers and cord-cutters, rather than households (which is how cable, satellite and telco TV companies report their subscriber figures).
But no matter how you slice it, traditional cable and satellite TV is in decline. Traditional U.S. pay-TV providers saw a record 3.7% drop in 2017, to 94 million households, according to S&P Global Market Intelligence's Kagan. Overall, 186.7 million U.S. adults will watch traditional pay TV in 2018, down 3.8% from last year, according to eMarketer's estimates.
The main factor driving away pay-TV customers? The chief culprit continues to be price. The average pay-TV bill in 2017 totaled $100.98 per month, which represents a 5.5% compound annual growth rate (CAGR) between 2000-17, according to Kagan.
That's an opportunity for the lower-cost "virtual" pay-TV entrants. Kagan estimates virtual multichannel services will hit nearly $2.82 billion in overall revenue in 2018, rising to more than $7.77 billion by 2022. Among OTT TV services, average revenue per subscriber is roughly one-third of traditional cable TV but Kagan expects virtual pay-TV services to increase average monthly revenue to $37 in 2018 for a 19% year-over-year increase.
About 70% of pay-TV subscribers feel they get too little value for their money, according to Deloitte's 2018 Digital Media Trends Survey. In addition, about 56% of pay-TV customers say they keep their subscription because it's bundled with their home broadband internet, per the Deloitte survey.
In other words: Expect the erosion in the legacy pay-television sector to continue, as people flock to cheaper OTT services.
New York-based eMarketer, a division of Axel Springer, bases its forecasts on an aggregation of third-party sources. For the pay-TV/OTT forecast, the sources include data provided by companies directly as well as surveys and studies from more than two dozen sources, including Nielsen, Deloitte, Kagan, GfK, Parks Associates, and MoffettNathanson.
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