Pay TV Trends: Cord-Cutting and Cord-Shaving on the Rise

Centris-Pay-TV-Cord-Cutting-Trends-Q1-Q3-2013-Jan2014While the pay-TV market appeared to be stemming subscription losses as 2013 wore on, new data from Centris Marketing Science nevertheless finds an apparent rise in the incidence of cord-cutting households between Q1 and Q3. And it’s not only cord-cutting that seems to be growing; a separate [updates: contested, "clarified"] study from The NPD Group indicates that “cord-shaving” (cutting back on the amount of money spent on subscriptions) is increasing, with the share of households subscribing to premium TV services such as HBO and Showtime on the decline.

Turning first to the cord-cutting data, Centris indicates that 8% of US households reported having eliminated their pay-TV subscriptions in Q3 2013, double the percentage from the Q1 survey (4%). With the percentage of households counting as “cord-nevers” (never having had pay-TV) relatively steady at 8% in Q3, that leaves 84% of households subscribing to pay-TV during Q3, down from 87% 6 months earlier.

Not surprisingly, cord-cutting behavior is more prevalent among Millennials (11%) than the general population, a trend that is fairly well established at this point. Other demographic groups showing above-average inclination to cut the cord are black households (11%) and those with annual incomes of less than $25k (12%), for whom cost is most likely the primary factor.

Among cord-cutting households, 63% reported having a subscription to an over-the-top (OTT) service in Q3, up from 56% during the first quarter.

The rise of OTT services such as Netflix, Hulu Plus and Amazon Prime may be having an effect on premium channel subscriptions (although the requisite disclaimer that correlation does not equal causation applies). According to the [disputed by HBO] NPD Group data, the percentage of US households subscribing to premium TV channels dropped from 38% in March 2012 to 32% in August 2013, while the share of households subscribing to subscription video-on-demand services concurrently rose from 23% to 27%. Services such as Netflix may indeed be starting to be treated as a premium channel of sorts; a study released last year by GfK found Netflix users professed to watching less premium cable as they likely viewed their subscription service as an alternative, particularly given the success of its original programming.

Other Findings:

  • Among non-pay-TV households, 67% reported using over-the-air (OTA) for TV viewing in Q3, up from 64% in Q1. Use of OTA was higher among Hispanic non-pay-TV households (74%).
  • Interestingly, the percentage of non-pay-TV households who claimed to have used an OTT service during the 30 days prior to the Q3 survey dropped a couple of points to 75%. That figure remained higher among Hispanic households (81%).

About the Data: The Centris data is based on a survey of more than 30,000 US households.

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