Cord-Cutting To Accelerate In 2021, With 27% Of Cable Households Disconnecting
BETA
This is a BETA experience. You may opt-out by clicking here
Edit Story
Editors' Pick|

Cord-Cutting To Accelerate In 2021, With 27% Of Cable Households Disconnecting

David Bloom

Cord-cutting will accelerate in 2021, sending cable-TV subscriptions into virtual free fall, with a whopping 27% of U.S. households saying they’ll cancel their pay-TV package by year’s end, a new survey by The Trade Desk TTD predicts.

That’s nearly double the 15% cancellation rate of 2020, and far above the single-digit rates of previous years, according to the second Future of TV survey of 2,100 U.S. consumers released today. Cord-cutting already has left the industry at its lowest ebb in decades, with only about two-thirds of U.S. households still subscribing to cable, satellite or “skinny bundle” packages of traditional broadcast and cable networks.

Time spent watching traditional TV has plummeted as well, as pandemic audiences increasingly shifted attention to streaming services, the study says. Already 68% of view time is devoted to streamers, only 28% to traditional TV.

“COVID has accelerated cord-cutting trends that were already underway,” said Tim Sims, chief revenue officer of The Trade Desk, a Ventura, Calif.,-based ad-tech company that commissioned the study. “It’s not because U.S. consumers have fallen out of love with TV, but that there are now more convenient ways of consuming it. As more broadcasters launch and expand their streaming services, these gaps are only going to widen.”

Advertisers will increasingly follow the eyeballs, according to a separate part of the survey that interviewed 150 advertisers. Connected TVs are the top choice for marketers looking to reallocate campaign budgets, and already are devoting 18% of their ad spend there, the study said.

Marketers will need to adapt both their ad-buying habits and their teams’ skill sets if they’re to adequately take advantage of the new audience opportunities, the study said. Already, almost three in five of the marketers surveyed said they are making fewer upfront traditional TV ad commitments in 2021.

Marketing on connected TVs is a different business in many ways from traditional cable and broadcast, so almost two in five advertisers said they’re focusing on building skill sets appropriate to the new TV universe. More than half said they plan to make sure their current teams have skills in both traditional and connected TV.

The study said several behavior shifts are already manifesting in both video consumption and the ads designed to reach those audiences:

  • The breakdown of prime time and other day-part programming in an on-demand world;
  • The need for integrated, cross-channel strategies that are more targeted and that tightly control frequency, or how often a specific audience sees a given ad;
  • A shift to new kinds of ad formats, especially shorter ones.

“The TV ad business is at a tipping point,” Sims said. “Digitally savvy advertisers recognize the advantages of CTV advertising. Many are embracing these opportunities, and that also means transforming some of the industry norms, including how we think about skills and ad-buying processes such as the upfronts.”  

The study also suggested that even as subscribers shift from pay-TV to streaming services, many of them don’t want to pay much for it.

Price sensitivity over the ever-increasing cost of cable-TV packages has long been an issue for many consumers. Now, with many households feeling the pinch of the pandemic’s economic and medical impacts, that sensitivity has increased even as entertainment alternatives have burgeoned.

The study said 72% of those surveyed preferred free or low-cost ad-supported TV over ad-free and more expensive options (14% preferred the ad-free alternative).

Just over half those surveyed said they didn’t want to spend more than $20 a month on streaming services, or about the combined cost for Netflix NFLX and Disney+ monthly subscriptions. Other recent studies have found that the average household has between three and four subscription services.

Spending resistance by a large share of the market should be good news for free, ad-supported services such as Fox’s FOXA Tubi, ViacomCBS VIAC ’ Pluto, and Comcast’s CMCSA Xumo and its free tier of Peacock, as well as the Roku Channel and Amazon’s IMDb Channel.

More worrisome for broadcast and cable is the weakening power of live sports, which was shut down for months during the initial lockdown and has struggled with the pandemic’s impacts and soft ratings ever since.

The study found that nearly two in five of those surveyed are watching live sports on connected TV screens through ad-supported streaming and social-media platforms. Only 30% cited live sports as a reason to maintain their cable subscription, half as many who said that in a study just nine months earlier.

Already, increasing amounts of live sports have moved online to Amazon AMZN , ESPN+, league-owned apps, and similar outlets. Even ViacomCBS’s Nickelodeon channel did a broadcast this weekend, with a unique kid-oriented take that received positive reviews from many industry observers, on an NFL playoff game that was also carried on CBS.

The Future of TV study of 2,105 adult U.S. consumers was conducted online by YouGov in early December. The advertiser study of 150 TV ad planning and buying decision makers with ad budgets of more than $5 million was conducted by Advertising Perceptions in mid-November.

Follow me on Twitter or LinkedInCheck out my website

I’m a Los Angeles-based columnist, speaker, podcaster and consultant focused on the collision of tech, media and entertainment. I also host and produce the Bloom in Tech

I’m a Los Angeles-based columnist, speaker, podcaster and consultant focused on the collision of tech, media and entertainment. I also host and produce the Bloom in Tech podcast. In my long and winding career, I previously worked as an award-winning writer and editor for publications such as Variety, Deadline, Red Herring, and the Los Angeles Daily News, and have been a communications exec at MGM, the USC Marshall School of Business, and the Los Angeles city redevelopment agency. I’m a graduate of the University of Missouri, the world’s greatest journalism school, and loving progenitor of two remarkable descendants.