TV Cord Cutters Steadily Rising; Numbers Remain Low

April 6, 2012

convergence-us-cord-cutters-2008-20012-apr2012.jpgThe percentage of American pay TV subscribers cutting the cord is low, but the numbers are gradually rising, says Convergence Consulting Group [pdf] in an April 2012 report. Using its proprietary cord cutting model, which takes into account economic conditions, annual subscriber additions, and digital transition, the company estimates that 2.6% of US TV subscribers, or 2.65 million subscribers, cut the cord between 2008 and 2011 to rely solely on online, Netflix, and other sources. This includes 1% (1.05 million) who did so just last year. Additionally, Convergence forecasts another 0.93 million subscribers to cut the cord this year, to reach 3.6% (3.58 million) between 2008 and 2012.

The Convergence estimates are lower than survey results released in January 2012 by Deloitte, which found that 9% of Americans have cut their pay TV connection because they can watch all their favorite shows online, while a further 11% are considering doing so.

Mail Takes Biggest Share of Rental Market Revenue

Looking at the US movie and TV rental market, Convergence estimates that mail represented one-quarter of total revenue in 2011, followed by VOD (cable, satellite, telco TV – 21%), store (20%), and Kosks (19%). Online subscriptions (Hulu Plus & Netflix) accounted for 13% share. For this year, though, online subscriptions are predicted to almost double to 25% share, while Kiosk revenues will rise to 22% share. Offsetting these growing revenue streams will be store, predicted to drop to 13% share, and mail, forecast to drop to 16% share. VOD will remain constant at 21% share.

Brands, Programs to Benefit From Migration to Online Video

Data from a Digitas survey released in April 2012 indicates that many consumers want TV shows to offer them the opportunity to watch content on another screen. In fact, 58% of respondents with a favorite TV show said that if that program posted exclusive videos online, they would watch those videos.

Brands can benefit from engaging these online viewers, too: 51% of online video viewers aged 18-44 said they would look up a new brand or product if it was mentioned in a video they were watching online. Almost 2 in 5 respondents aged over 55 said they would do the same, with women more likely than men (44% vs. 34%).

Many Already Online While Watching TV

Results from the Digitas survey also show that more than 3 in 5 US adults have browsed through online content while watching TV, a proportion that rises to 71% among 18-44-year-olds. Slightly more than one-quarter of US adults have looked at content related to the show they were watching, although a significantly higher proportion (48%) browsed unrelated content.

This behavior is especially prominent among device owners, finds Nielsen in April 2012 analysis of a Q4 2011 survey of connected device owners in the US. 88% of tablet owners and 86% of smartphone owners reported using their device while watching TV at least once during a 30-day period. This was not a random occurrence, either: 47% of tablet owners and 41% of smartphone owners said they used their device at least daily while watching TV.

Other Findings:

  • According to Digitas, among online video viewers who have a favorite TV show, 69% of those aged 18-34 would be interested in watching exclusive online content from their favorite show.
  • Almost 3 in 5 respondents aged 18-34 who follow a brand on social media would check out a video posted by the brand they follow.
  • Online video viewers across all age brackets display an interest in watching an online video starring their favorite celebrity. This is highest among 18-34-year-olds (62%) and lowest among those over 55 (42%).
  • The Convergence report estimates that based on the full-episode TV shows broadcasters and cable networks made available online for free in 2011, on average 19% of the weekly viewing audience watched on average between 1 and 2 episodes at a broadcaster or cable network, or one of their distribution partner’s websites. This is up from 18% in 2010 and 15% in 2009, and is forecast to be remain flat at 19% this year.
  • Convergence estimates that broadcast (including local station) and cable network online TV advertising revenues made up 2.8% of their 2011 advertising revenue, and will account for 3% this year.
  • Download movie and TV sales are estimated to have accounted for 4% and 3% respectively of 2011 DVD/Blu-ray/Download Movie/TV sales.

About the Data: The Digitas survey was conducted online within the US by Harris Interactive on behalf of Digitas from March 22-26, 2012 among 2,211 US adults age 18 years and older.

Explore More Articles.

Marketing Charts Logo

Stay on the cutting edge of marketing.

Sign up for our free newsletter.

You have Successfully Subscribed!

Pin It on Pinterest

Share This