The cable TV cord-cutting issue has received widespread industry attention since the emergence of popular streaming and digital TV services. Indeed, eMarketer predicts that the cord-cutting trend will continue unabated over the next few years at a rate of around three percent per year (July 2019, prior to the stay-at-home directives).
While the majority of American households currently subscribe to cable, our latest research indicates that with almost all Americans working from home, the shift away from traditional linear and cable TV may be accelerating — and that this shift is much more acute among the key 18- to 34-year-old demographic.
Why is this important?
18- to 34-year-olds are highly prized by advertisers. They are proportionally high spenders, often with significant disposable income for the first time; they’re building what might become lifelong brand relationships; and they are trend-setters.
According to our latest research, 74 percent of this age group that have a screen for TV viewing have never had cable, have already cut the cord, or are planning to cut the cord. This contrasts with the 55-and-over age group, where 56 percent of viewers are shunning cable TV. Of those who still have cable, 11 percent plan to cut the cord by the end of 2020. This rises to 18 percent for the 18-to-34 age group.
Young people have already moved, en masse, to new TV viewing models.
With only a quarter of them having any long-term interest in traditional cable TV, young professionals have already moved, en masse, to new TV viewing models. That’s compelling evidence that in a few years we won’t be talking about linear or cable TV at all. It will all be online and streaming. For broadcasters, it’s all about how quickly they can pivot to where the eyeballs are moving — and many of them are already investing heavily in order to succeed in a world of Connected TV.
The role of live sports
While current cost-cutting pressures may be contributing to the decline of traditional cable TV subscriptions for many Americans, so is the shifting content landscape. One of the final remaining attractions of cable TV to many households is live sports. According to our latest research, 60 percent of those with cable TV and planning to keep it claim live sports is the main reason to maintain their cable subscriptions.
But in an environment where live sports events have been universally suspended, viewers have shifted their focus to other forms of TV content. Americans who watch live sports cited movies, TV series, news, documentaries, and reality shows as their go-to content in the absence of live sports.
Given the dependence of cable TV on live sports, the longer that programming is dark, the greater the risk that consumers will abandon cable TV subscriptions. And over time, broadcasters will need to develop new streaming platforms for live sports.
The longer live sports programming is dark, the greater the risk that consumers will abandon cable TV.
Subscription or ad-funded streaming TV?
With streaming TV consumption on the rise as many U.S. workers remain at home, our survey suggests that viewers would prefer to watch free or reduced-price streaming services with advertising versus subscription services with no advertising.
Significantly, among the 18- to 34-year-old age group, this dynamic is even more pronounced. Sixty-six percent of them are likely to watch ads while streaming a TV show (with ads showing every other episode) if it lowers their monthly subscription costs, versus 55 percent for 35- to 54-year-olds, and 47 percent for the 55+ year-old age group.
Even more significant, the younger age group is more interested in relevant ads, targeted to their interests.
As we all become more focused on protecting consumer privacy in a digital economy, it’s significant that it’s the younger generation that fully appreciates the value exchange between relevant advertising and access to premium content. They want a better viewing experience they control. They want it to be affordable. And more than any other age group, they are willing to experience ads relevant to their interests in order to receive that value.
The number one issue for all consumers was having to watch the same ads over and over.
Connected TV can remedy common frustrations
One area where there was broad agreement across the age groups was how the advertising experience could be improved. And the number one issue for all consumers was having to watch the same commercial over and over. This issue was followed by a desire to see fewer ads and experience fewer ad breaks.
As more viewers shift to connected TV, broadcasters and advertisers will be in a position to address issues of ad frequency and ad volume for the first time. With traditional cable TV, the broadcaster never knows exactly who’s watching, so the same ads are often repeated frequently. With Connected TV, advertisers can understand who was exposed to an ad, even across devices, and can reduce ad frequency as a result. In addition, advertisers can apply more data science to their marketing, making ads more relevant to the consumer without compromising their privacy. This increases the value of the ads, which means lower ad volume over time.
This survey for The Trade Desk was conducted by YouGov. Fieldwork for this survey was conducted on April 1-3, 2020. It’s a representative survey with a total sample size of 2,681 adults in the U.S. The survey was carried out online. The figures have been weighted and are representative of all U.S. adults (aged 18+).