Cord cutting rate now stabilizing in US

Technology -

"Cord cutting" — dropping traditional pay TV service in favor of Internet-based alternatives — may no longer be a niche activity, but recent data suggests the phenomenon may have stabilized.

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Copyright 2014 Reuters
Copyright 2014 Reuters

Some 300,000 people in the U.S. dropped their pay TV service in Q2 2014, according to an Aug. 7 report from the research firm MoffettNathanson. MoffettNathanson's data show that, while people are still cutting the cord, the rate at which they're doing so has stabilized.

"[It] appears that cord cutting slowed to an annualized rate of 400k homes, a meaningful deceleration and well below the peak (but still modest) rates of cord cutting seen in 2012." MoffettNathanson

MoffettNathanson founder Craig Moffett, a veteran television industry analyst, said in August 2013 that cord cutting was no longer an "urban myth." At the time, the rate of cord cutting was still accelerating.

Cable companies in recent months have taken some steps to prevent people from cutting the cord, including debuting less expensive "skinny" cable packages that include broadband Internet access, HBO, and a small number of other channels. These "skinny" packages start at around $30 per month.

An April 2014 survey published by Experian Marketing Services said that 7.6 million U.S. households, or 6.5% of all U.S. households, had cut the cord -- up 44% in the past three years. Ownership of an iPhone or iPad "noticeably increases the odds" that a household will cut the cord, Experian said.

"While the term cord-cutter implies that a household had a cable or satellite TV subscription that was cancelled, young adults starting out on their own for the first time may never pay for TV service." Experian Marketing Services

Experian notes that nearly 25% of adults between the ages of 18 and 34 who subscribe to a streaming video service like Netflix or Hulu do not pay for a traditional TV service.

Experian also found that households who only watch streaming video on mobile devices are 1.5 times more likely to cut the cord, while those who watch streaming video on TV are 3.2 times more likely to cut the cord.

A May 28 survey, released by research firm nScreenMedia, found that 84% of cord cutters are at least somewhat happy with their decision to drop their pay TV subscriptions. "A growing group of broadband consumers are finding that life without pay TV is not only plausible, but also pleasurable," the survey found.

Cord cutters consume an average of 212GB of Internet data per month, according to a May 14 report from the Sandvine network analysis firm. Non-cord cutters consume about seven times less data per month.

Dish Network said Aug. 5 that it had reached a deal with A&E Networks that will see the entertainment company provide programming from channels like A&E (home of "Duck Dynasty"), the History Channel, and Lifetime for the satellite provider's upcoming online television service.

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