The number of American pay TV subscribers cutting the cord to focus solely on Netflix, over the air, online, and other sources is growing faster than expected, according to the latest study from Convergence Consulting Group. Last year, the researchers predicted that 930,000 pay TV subscribers would cut the cord, but this year estimate that 1.08 million went ahead and did so. That represents 1.1% of pay TV subscribers, and means that between 2008 and 2012, 3.74 million (3.7%) of US TV subscribers cut their subscriptions.
The number of estimated cord cutters last year (1.08 million) not only exceeded the forecast of 0.93 million, but also the estimated number from 2011 (1.05 million). This year, Convergence forecasts another 0.96 million homes will cut the cord, which is a step up from last year’s forecast of 0.93 million. All told, the researcher predicts that by the end of this year, 4.7 million pay TV homes will have cut their subscriptions since 2008, or 4.7% of pay TV homes.
The estimates are based off Convergence’s proprietary cord cutting model, which takes into account economic conditions, annual subscriber additions, and digital transition.
- An estimated 31,000 US TV subscribers were added in 2012, far less than the 1.08 million that cut the cord. The number of subscribers added is also down significantly from 112,000 in 2011. Convergence forecasts a rebound to 98,000 additions this year, but that’s still down from the 1.86 million average from 2004 to 2009.
- Broadcast and cable online TV advertising revenues represented an estimated 3.1% of total TV ad revenue, forecast to increase to 3.4% this year.
- Convergence estimates that the audience for free online full-episode TV actually declined slightly. That is, of the full-episode TV shows that broadcasters and cable networks made available online last year, on average 18% of the weekly viewing audience watched 1-2 episodes, down from 19% in 2011. That figure is forecast to be 17% in 2013 and 2014.
- Looking at the US movie and TV rental market, Convergence estimates that online subscription (Hulu Plus & Netflix) accounted for a leading 28% of revenues in 2012, followed by kiosk (21%), VOD (cable, satellite, telco TV – 20%), mail (15%), store (13%), and online transactional (3%). Those follow fairly closely from last year’s forecast.
- This year, Converge predicts online subscription to grow to 34% share of revenues, ahead of kiosk (22%), VOD (19%), mail (12%), store (9%), and online transactional (4%).