The number of U.S. consumers who have cut the cord with their pay-TV service providers continues to rise, but demand for live sports continues to be one major reason why many people remain reluctant to drop their traditional TV services, according to a new PwC report.
“Cord cutting has more momentum than ever,” it said Dec. 18 in its fifth annual TV and video consumption survey, “I Stream, You Stream: Winning a Video World.” Nineteen percent of respondents said they cut the cord, up from 17% in 2016 and 16% in 2015, according to PwC. At the same time, 73% of the 1,986 Americans 18-59 years old with annual household incomes over $40,000 that PwC polled in October said they still subscribed to pay-TV, down from 76% in 2016 and 79% in 2015, according to PwC.
The number of viewers “trimming” their pay-TV subscriptions without dropping them completely also continued to grow, to 27% this year, up from 22% last year and 18% in 2015, it said.
The number of respondents who use Netflix is now the same as pay-TV, at 73%, according to the report. More people than ever are now accessing TV content from the Internet, with the highest growth seen among older consumers 50-59 years old (increasing to 63% of those surveyed, up from 48% in 2016), it said.
Forty-six percent of the services used by respondents are ones they acquired just within the last six months, PwC also said.
Live sports is “one of the primary motivators keeping people connected to the cord” for now, but it remains to be seen how long that will continue for, it said. A whopping 82% of sports fans surveyed said they would end or trim their pay-TV subscription if they no longer needed it to access live sports, according to PwC. Eighty-one percent of sports fans subscribed to pay-TV, compared to 73% of respondents overall, it said. The average sports fan would pay about $23 a month for unlimited access to live sports on any platform, it found.
Despite the rapid growth of streaming and OTT services, there are “signs of unrest” in the market, it said, warning that increasing options and overwhelmed consumers may deter future growth. For one thing, 75% of respondents said they couldn’t handle using more than four services in addition to pay-TV. Respondents, on average, watched just two services on a “regular basis,” regardless of how many they subscribed to, PwC also found.
Consumers are also finding creative ways to get around paying for more services than they have to, it said, adding many sign up and then quickly sign out of subscriptions and free trials — especially true among the trimmers, 55% whom “regularly” sign up for a trial and a third of whom don’t usually keep the subscription after the trial period is over. Therefore, exclusive content, including original programming, is not quite enough to guarantee success, PwC said.
Content creators are aggressively working to meet the demand for new content the growth of OTT and streaming services are generating, PwC said, noting Netflix plans to spend $8 billion on content in 2018, while Amazon allotted $4.5 billion for this year. There’s obviously market demand for content and a wide variety of choices, it said.
PwC identified the ability to offer consumers more context around their choices and, in the process, better methods for content discovery as the next major challenge for OTT and streaming service providers. Fifty-five percent of respondents reported finding themselves looking for a new TV show or movie to view at least once a week after cycling through their watch list, it said. But 62% said they struggled to find something to watch, although the frustration varied among pay-TV subscribers compared to streamers, it said.
Increasing second-screen usage presents a unique opportunity for advertisers and content creators, PwC also said. Of the survey respondents, 54% said they paid attention to advertising when watching video content, 65% looked up information about a product they saw advertised while viewing a show, and 56% of sports fans would like to have access to more interactive content, including statistics, exclusive interviews and the ability to chat with other fans while watching live sports, it said. Fifty-five percent of respondents “always” or “usually” use a mobile device while watching TV, up from 36% a year ago, it said.
But PwC warned that advertising on streaming services needs to become “less burdensome, more engaging and more relevant,” noting focus group respondents said many streaming services show “the same commercial over and over,” which is downright “annoying.” Those respondents also prefer longer ads at the start of a program, with fewer ad interruptions throughout the rest of the stream, it said.