The 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.
- 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.