A Fresh Look at Cord-Cutting

Roku undertook a survey that took a deep dive into cord-cutting and interviewed over 7,000 homes in March. The overall conclusion of the survey is that cord-cutting is accelerating in 2020. The survey was done at the beginning of the pandemic, and overall industry statistics for the second quarter make it sound like cord-cutting exploded in the second quarter of this year.

The Roku survey segregates the television market as follows: 43% of homes still have traditional cable TV. Another 25% are cord-shavers and still have traditional cable TV but have downsized to a lower-cost video package. 25% of the market are now cord-cutters, and 7% of the market never had traditional cable TV.

Probably the most interesting statistic is that one-fourth of the market consists of cord-shavers who have reduced their traditional programming packages. It’s been clear that cord-shaving has been happening, but I’ve never seen it quantified before. The big cable companies never mention cord-shaving when reporting cable TV subscribers. The magnitude of the number of households that have trimmed back to lower-cost programming packages explains why the paid subscriptions to cable networks is dropping far faster than the drop in cable customers.

80% of cord-cutters say that they are satisfied with their decision to end their subscription to traditional TV. Two-thirds of cord-cutters say they wish they had cut the cord sooner.

Lack of sports is driving some cord-cutting during the pandemic, and 28% of cord-cutters say that lack of sports is their number one reason for cutting the cord. 17% of cord-cutters (or 4% of the whole video market) say they will consider returning to traditional TV when sports return to the air full time. 31% of cord-cutters say they will pursue a sports streaming service when sports returns.

The number one reason cited for cutting the cord is cost savings, and many of those surveyed say they were driven to this decision due to a change in household income due to the pandemic. The average Roku user said that they are saving $75 per month with cord-cutting. As a household that has cut the cord, I find that number a little hard to believe – but it’s what they reported in the survey. My consulting firm does surveys and we’ve learned to always be leery when households cite numbers of any kind; in this case, it would be natural for many homes to exaggerate their savings as a way to justify cutting the cord. I’m sure some homes have saved $75, but that seems like a high average and it doesn’t take more than a few subscriptions to online video services to eat into that savings.

Cord-cutters are watching more free ad-supported content as a way to control costs. 42% of cord-cutting households said that free content or extended free subscriptions to streaming services helped to convince them to cut the cord.

45% of the households in the cord-shaver category say they are likely to cancel traditional TV in the next six months. Every survey about cable TV I’ve seen for the last five years has included substantial numbers of homes that say they are about to drop cable TV – but then don’t. But this statistic is a lot higher than I’ve ever seen and indicates a lot of households are thinking about cutting the cord. It’s often a complicated decision for a home with multiple family members to finally cut the cord.

The pandemic makes it harder to discern long-term trends. This survey supports the industry belief that a lot of homes continue to drop traditional TV packages. But the pandemic provides several good reasons to drop a cable subscription that won’t be permanent. Sports will eventually come back to TV and sports fans are going to subscribe. As the economy rebounds, people will get back to work – it’s an easier decision to cut a $100 per month cable subscription when one or more people in a home are unemployed. The pandemic has also killed the creation of new programming content, and many cable subscribers only pay in order to watch the latest versions of their favorite shows. I’ve read that it might take more than a year after the pandemic ends to see a fresh supply of new content.

It will take time to see if an improved economy reverses any of the cord-cutting trends. For now, any company offering cable TV is in for a rough ride. It’s hard to see any positive news from the results of this survey for programmers or cable companies.

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