Cord Cutting Gains Steam in 2024

Seven big questions re: cord-cutting:
1) How many homes subscribe to a pay-TV bundle?
2) What share of pay-TV subscriptions is streaming?
3) Are streaming pay-TV services replacing all the subscribers leaving traditional pay-TV?
4) Where is the bottom for pay-TV subscriptions?
5) Why is cord-cutting accelerating?
6) Why was pay-TV ripe for destruction?
7) Is time spent with pay-TV declining at the same rate as subscribers?

Big question #1: How many homes subscribe to a pay-TV bundle?

Quick answer: 66M (51% of all HH)

YoY change in pay-TV subscribers:
1) Traditional pay-TV - ↓ 5.7M
2) Streaming pay-TV - ↑ 917K
3) Total pay-TV - ↓ 4.8M

Total pay-TV subscriptions (YoY growth):
1) 2018 - 92.3M
2) 2019 - 89.1M (↓ 4%)
3) 2020 - 85.6M (↓ 4%)
4) 2021 - 80.7M (↓ 6%)
5) 2022 - 76.0M (↓ 6%)
6) 2023 - 71.2M (↓ 6%)
7) 2024 - 66.4M (↓ 7%)

Share of U.S. households with a pay-TV subscription:
1) 2014 - 81%
2) 2024 - 51%

Big question #2: What share of pay-TV subscriptions is streaming?

Quick answer: 26%

Streaming pay-TV subscriptions (YoY growth):
1) 2018 - 7.2M
2) 2019 - 9.6M (↑ 33%)
3) 2020 - 12.0M (↑ 25%)
4) 2021 - 12.5M (↑ 4%)
5) 2022 - 14.1M (↑ 12%)
6) 2023 - 16.2M (↑ 15%)
7) 2024 - 17.1M (↑ 6%)

Streaming share of pay-TV subscribers:
1) 2018 - 8%
2) 2019 - 11%
3) 2020 - 14%
4) 2021 - 16%
5) 2022 - 19%
6) 2023 - 23%
7) 2024 - 26%

Big question #3: Are streaming pay-TV services replacing all the subscribers leaving traditional pay-TV?

Quick answer: No.  Since 2018, traditional pay-TV has lost 36M subscribers, while streaming pay-TV has added 10M.

Big question #4: Where is the bottom for pay-TV subscriptions?

Quick answer: By 2030, analysts believe total pay-TV subscriptions could drop below 45M, reaching less than ⅓ of all U.S. households.

Why this matters: A few weeks back (#404), I posted data from Nielsen showing the decline in reach over the past decade for several networks.  This hit a nerve, and several readers believed the data was misleading.  The bottom line is pay-TV has lost 34% of its subscribers over the past decade.  Of course, reach numbers are going to fall.

The decline in reach by network (2014-24), according to MoffettNathanson:
1) FX - ↓ 71%
2) USA - ↓ 63%
3) TBS - ↓ 58%
4) CNN - ↓ 52%
5) Fox - ↓ 51%
6) TNT - ↓ 50%
7) NBC - ↓ 46%
8) CBS - ↓ 45%
9) ABC - ↓ 41%
10) ESPN - ↓ 36%
11) Fox News - ↓ 35%

What’s next: Expect this problem to worsen as the best content on linear TV (NFL, etc.) moves to streaming.  Last year, 14 of the top 50 (28%) shows on TV were linear only.  Next year, all 50 will be available through streaming.

Big question #5: Why was pay-TV ripe for destruction?

Three reasons why pay-TV was ripe for destruction, according to Doug Shapiro:
1) Consumers were paying for channels they didn't watch
2) Pay-TV prices rose faster than inflation
3) Pay-TV companies were making fat margins

Big question #6: Why is cord-cutting accelerating?

Quick answer: Two primary reasons.  First, sports drive monthly pay-TV bills up, leading people to cancel.  Second, networks are putting their best content on streaming, leading people to cancel.  Craig Moffett from MoffettNathanson describes this as “The Doom Loop.”

Three waves of disruption for the pay-TV ecosystem, according to Matthew Ball:
1) Wave #1 (2007 - 2015) - Pay-TV is getting better but too expensive. Better value substitutes emerge

2) Wave #2 (2015 - 2019) - Pay-TV is still getting better, plus cheaper. Better value substitutes are getting better

 3) Wave #3 (2019 - Present) - Pay-TV is getting worse and more expensive. Suppliers focused on better value substitutes

Big question #7: Is time spent with pay-TV declining at the same rate as subscribers?

Quick answer: No. Time spent is declining 2X as fast as subscribers.

Why this matters: Consumers who recently cut the cord watch a lot of TV. This is a bad sign since it leaves a subscriber base filled with people who do not watch a lot of pay-TV.

Bottom line: Less time spent with cable → Fewer ad impressions → Lower advertising revenue