Bernard Hastings | Last Updated:
The continued rapid technological advances and changing landscape in multimedia during 2021 have led to a major paradigm shift in work, businesses, and lifestyle. With this being said—is the era of growth in cable and satellite subscriptions going to end soon? Experts say that this instance is inevitable, and the global COVID-19 Pandemic has only boosted its progression. Since specific health protocols have limited us to the confinement of our homes, we are left with online solutions regarding entertainment and other necessities in helping us get through the pandemic. And studies have shown that the use of social media and streaming services has increased significantly during these periods.
In the United States alone, it is predicted that the case of cord cutting could increase up to 51.1 million in 2022. And the figures presented are expected to go higher as time progresses. Researchers have found a variety of factors that is causing the changes. Among the primary explanations for the rise of cord-cutters includes that they are finding the contents they need online, the cost of subscription fees are no longer practical, and the other group says that they don’t use or need television. Below is a study based on facts and statistics of US citizens that have opted to cut ties with traditional cable and satellite subscriptions.
Cord Cutting is a term used in the telecommunications industry to describe an event where the trend in viewership on traditional television goes down due to the cancelation of subscriptions. A major reason for its occurrence is the increased popularity of online streaming services like Netflix, Disney Plus, ESPN Plus, Prime Videos, and so on. Due to their convenience and portability, they have become a popular option among Americans. In the United States, the trend of cord cutting has significantly jumped in the five years or so. A recent survey revealed that 76% of American citizens are still mostly reliant on cable and satellite subscriptions in 2015. However, it had dramatically dropped to 56% in 2020. (1)
Research indicates several factors for the rapid rise of cord cutting in the United States. 71% of the survey’s respondents who do not use satellite or cable subscriptions answered that they could rely on the internet for the contents they need. 69% of them say that the cost of maintaining the subscription and other services attached to it is too high. The remaining 49% of the respondents say that television is no longer a necessity to them. The trend in cord cutting is not expected to slow down anytime soon, and it would progressively grow as we move forward into the future.
One popular study on cord cutting in the United States was conducted by an agency called Waterstone Group. Their research is also among the first groups that have attempted to identify cord cutting statistics in the United States. The study was performed as early as 2018 to provide a better prediction for 2019 and onwards. Another reason why many researchers trust the agency’s case study is because they have included all of the 50 US states in their research. To make the study more reliable, they have gathered a survey from 5,000 US resident respondents to determine the level of cord cutting in the country.
The research showed that 59% of Americans have decided to cut the cords, while 29% are undecided but considering cord cutting. Among the 50 US States, Idaho has the largest number of cord cutting that represents 72% of the result. They are followed by Kentucky and Tennessee with 70% and 69%, respectively. And the US States with the lowest case of cord cutting comes from New Jersey and Mississippi with 36% and 47%, respectively. Although they are at the bottom of the list, the number is still relatively high, and several independent studies have concluded that the number of cord cutting will go higher as time progresses. (2)
eCommerce and other online services like food delivery and online streaming are progressively growing since the mid-2000s. However, its benefits and advantages have been especially amplified during the pandemic. Therefore, it is expected that the general population worldwide would continue to patronize modern technologies and embrace the changes that are to come as we move forward. As repeatedly emphasized, cord cutting is among the major changes we are going to see in the next few years or so. And among other reasons indicated earlier, these changes are inevitable in modern communities, and you can expect them to occur in any progressing countries.
Before the global pandemic, cord cutting is already on the rise. In fact, 9.8% of American adults cut the cords in 2017. The trend went up to 12.9% in 2018, which represents 33 million US residents. As of 2019, the year before COVID-19, cord cutting had increased to 15.2%, which is approximately 39.3 million individuals. At the end of 2021, it is expected that cord-cutters could go up to 50 million individuals in the United States alone if the trend remains consistent. And then, the case of cord cutting is predicted to reach 55.1 million the following year. The trend is expected not to slow down anytime soon. (3)
Research also shows interesting facts about the dramatic drop in cable and satellite subscriptions. As expected, only 31% of the younger generations between ages 18 to 29 are still using the television or telephone as a source of entertainment and mode of communication. While US adults within the ages of 30 to 49 show an estimate of 73% in 2015, which have greatly plummeted to 46% in 2020. A large portion of the demographics represent individuals in the ages 50 to 64 that have an estimate of 80%. However, a significant decline to 66% was also incurred during the five-year period. Lastly, 86% of ages 65 and above still heavily rely on television for entertainment. For the past years, it has only declined to 81%.
Cable and satellite subscriptions no longer appeal to the younger generation due to the convenience of available contemporary technologies. In fact, it was found that 61% of the demographics haven’t even attempted to subscribe to any cabled services. The percentage presented is between the ages of 18 to 29 years. 91% of the age group provided a reason that they can access the contents that they need through the internet. 57% state that the cable and satellite subscription cost is expensive, resulting in the decision. In comparison, 53% of the demographics say that they don’t use the television that often. (4)
A major advantage of our smart devices is their apparent size. They are very portable, and you can carry them anywhere, and makes it easy for you to access your online multimedia library or social media accounts. Also, smart devices and online streaming services are more affordable compared to television sets and the service charges in maintaining them. Because of its global popularity, online streaming services’ market size has already reached $50.11 as of the year 2020. And studies have predicted that streaming services will continue to progress in the foreseeable future. In fact, they’ve found that it will have an annual growth rate of 21% between the years 2021 to 2028. (5)
Basing on the range of user base in the United States, YouTube is still the most popular video streaming site with over 163.75 million users as of 2019. They are followed by Netflix with 46.55 million users and then Hulu with 26.5 million users. Regarding online music streaming services, Spotify is still the top option for many individuals in today’s generation. The study found that 49% of the respondents shared that they are still relying on Spotify for music, radio, and podcast for the year 2020. The next online music applications behind Spotify are Pandora Music (33%), Amazon Music (32%), iTunes (15%), and YouTube Music (13%). (6) (7)
The COVID-19 pandemic had definitely left a lasting impact on our economy in 2020. And the workforce and brick-and-mortar businesses are probably the most affected sectors. Also, the pandemic has caused a significant increase in cord cutting since cable and satellite subscriptions aren’t cost-effective. In addition, most areas around the globe underwent lockdown, and specific health protocols have limited our movement from one place to another. As a result, we have seen a huge growth in online services from food and parcel deliveries to streaming services in the United States alone. According to research, the pandemic has accelerated cord cutting in the country, and it will continue to plummet rapidly by 35.5% by the end of 2021, 39.3% by 2022, 43% by 2023, and 46.6% by 2024. (8)
As mentioned, the satellite and cable industry is already in a downhill spiral even before the pandemic due to our fast technological progression. What the pandemic has done is push the trend’s momentum even further. Also, being confined into our homes may have lead many people to realize the great advantage of cyberspace. Another notable statistic is that marketers are seemingly unaware of the progressive loss of viewership in traditional television. The consistent amount spent every year on television advertisements is evidence to such somewhat unawares. For example, $66.35 billion was spent in 2013, and then it went up to $70.59 billion in 2019. And due to the pandemic, it dramatically decreased to $60 billion last 2020.
Another huge reason for the increase in cord cutting is the high cost of satellite and cable subscriptions. A 2017 study of the 4th quarter of TiVo’s Online Video and Pay-Tv provided insights into how the prices of the subscriptions and maintenance fees significantly affect the TV industry. Video online streaming services are very affordable if you compare them with traditional television subscriptions. As a result, more Americans are opting for streaming services over satellite and cable subscriptions. Also, they are convenient to use and portable. We can carry them anywhere and enjoy our list of multimedia files anytime through our pocket-sized smart devices.
The independent report shared by TiVo to the public revealed that out of 3,300 respondents, 87% of them says that they choose to cut cords due to the high prices of monthly subscriptions and maintenance cost. In addition, they state that they don’t use most of the channels included in the package, and the contents that they need are readily available online but at a more affordable rate. It was added that 85% of the respondents mentioned that they are paying for monthly subscriptions, while 56% of them are incurring expenses of $76 or more for their subscriptions. Due to the many benefits of online streaming platforms, including convenience and economics, experts say that more subscribers will cut ties with traditional television and embrace modern technology’s advantages. (9) (10)
The decrease in the number of subscribers has greatly affected the industry of cable and satellite services. Some companies try to add internet services to their list but did not have any success in competing with established companies in the field. However, other companies have raised the cost of the subscriptions to recover from their losses. Comcast is an example of a telecommunications company experiencing large losses due to the rise of cord cutting. As of the second quarter of 2020, Comcast reports a decline of 477,000 subscribers and a 12% decrease in their profits. Other well-known telecommunications company in the US that experienced losses in cable subscription includes Dish, Mediacom, DirecTV, Charter, and Verizon, to name a few. (11)
In a televised interview with CNBC in 2019, Comcast CEO says that most of its incomes come from its internet-based services. The regular service bundle that offers includes cable, telephone line, and internet access. However, it was found that their customers are using the internet in large part. To address this trend, Comcast has decided to re-package their service bundle to a more internet centered. As a result of their efforts, approximately 1 million of their new subscribers are found to be customers availing of their services for the sole purpose of internet connection. It’s a timely decision since the company has lost 700,000 subscribers in 2019 alone—the figures presented represent 3.2% of their customer base for the year. (12) (13)