Some industry analysts say “half full,” others say “half empty” when it comes to cord-cutting/shaving in the pay-TV space. The latest projections—from eMarketer—tend to agree with the former point of view, while more apocalyptic assessments fail to hold sway.
This is good news for cable operators.
It seems the doomsayers may have been given too large a stage during the last couple of years. eMarketer noted that pay-TV is still the dominant medium in the United States, with 201.8 million adults watching traditional cable and satellite TV, while 175.4 million adults will view digital video.
This is not to say that over-the-top (OTT) services, such as Netflix and Hulu, are not cutting into pay-TV’s share of the market; they definitely are—but not to the extreme expected by some experts.
While eMarketer predicts that, by 2017, one in five U.S. adults will not watch traditional pay-TV programming, the total number of households subscribing to cable, satellite or telcom TV packages will drop only slightly by 0.7 percent to 98.7 million. What’s more, the research firm expects future cord-cutting to occur only in very small increments.
eMarketer Senior Analyst Paul Verna explained it this way: “Despite the gains made by OTT services, traditional pay TV remains an attractive option for many consumers, mostly because it still delivers content that’s not readily available on streaming platforms, such as news and live sports. It’s a complex and shifting environment, and one in which users tend to prefer hybrids of traditional and digital rather than one or the other.”
Another reason pay TV is not going away anytime soon is that advertisers continue to rely on traditional television to promote products/services. eMarketer expects TV ad spending to reach $72.72 billion this year, while digital video ad spending will reach just $12.55 billion.
Although pay-TV still reigns, cable operators must adapt to the proliferation of video content through digital channels to keep their hold on the market. They are doing so with initiatives like skinny bundles and by targeting ads to specific audiences. Improving content could also change up current trends, but would require a doubling down on traditional principles like researching consumer preferences and behaviors. Otherwise, must-see content on alternative channels could accelerate cord-cutting/shaving.
Another potential avenue for increasing pay-TV revenue is for cable operators to become multiplatform providers with a mobile-first mentality. It’s a big nut to crack, but cable marketers might want to take a crack at it—to stay competitive.
Said Verna, “The bottom line is consumers love TV programming, whether it’s delivered via the Internet, cable, satellite or antennas. As long as that remains the case, content owners and distributors will be able to keep monetizing this content through advertising, subscriptions or some combination of both.”