A report suggests that online television subscribers in the United States could outnumber traditional pay television homes in 2024. The research, commissioned by online video player and service provider Roku, forecasts that around 60 million television homes will access video on their television exclusively online within five years. We take a closer look at this claim.
It is no secret that traditional television subscriptions are in decline in the United States but whether they will be overtaken by online only viewers remains to be seen.
In the first half of 2019, the informitv Multiscreen Index shows that the top 10 services in the United States lost 2.69 million subscribers between them. Among them were 194,000 DIRECTV NOW online subscribers.
The Multiscreen Index shows that the number of subscribers to the top 10 services in the United States has declined from 87.92 million in mid 2014 to 80.42 million in mid 2019. That is a loss of 7.5 million subscribers, or 8.5% of their base in five years.
The top 10 services now include online services from AT&T and Dish Network, partially compensating for the loss of some of their traditional television subscribers.
The Roku report suggests that two million Americans “cut the cord” in the first half of 2019, moving from traditional television subscriptions to online alternatives.
Its second annual study is based on 7,000 adults in the United States, supplemented by behavioural data from 12,150 Roku account holders.
It concludes that five factors are driving the acceleration of so-called “cord-cutting”.
Virtual online television services, like Sling TV and DIRECTV NOW, offer a range of channels, together with an electronic programming guide and video on demand services at a reduced price.
Subscription video services, like Netflix and Amazon Prime, are spending billions on producing and promoting original programming, creating an abundance of high-quality viewing.
Advertising supported video on demand services offer free options.73% of all online video users in the Roku study watch such services.
Of those surveyed for the Roku study, 74% say online viewing is more convenient than traditional services and 89% report that using a streaming device is very easy.
Increasingly, cable and satellite companies are devoting less effort to trying to retain low-margin video subscribers. This is confirmed by announcements from leading operators.
The Roku study showed that 92% of its customers were extremely satisfied with their decision to cut the cord, compared to 82% of all cord cutters.
81% of all cord cutters say they have no intent to return to their traditional television service and 66% say they wish they had cut the cord sooner.
55% of traditional television subscribers are meanwhile dissatisfied with their provider and 26% say they are likely to cancel their traditional pay television service in the next six months.
However, the experience of recent years suggests that fewer people will actually leave their traditional television service.
If a quarter of subscribers were to leave that would be around 20 million homes cutting the cord in six months, or more than 75 every minute. So far, we have seen nothing like that number of net subscriber losses.
Roku suggests that a new generation of cord cutters are average mainstream television viewers, looking for value and choice.
The Roku report points to a market of 23.8 million cord cutters in the United States. That is households that previously paid for a traditional television subscription package but no longer do so.
Roku identifies 30.2 million cord shavers, or households that pay for a traditional television subscription package but have reduced their package in the last two years.
In addition, Roku classifies 6.4 million households as cord nevers, that have never paid for a traditional television subscription package. The implication is that they never will.
Together, these categories account for 60.4 million households. That compares to 55.5 million traditional television subscribers, who have not reduced their package in the last two years. The suggestion is that they could remain loyal television subscribers.
The hypothesis presented appears to be that some 60 million households in the United States could potentially move to online television services, while 55 million are more likely to remain loyal to traditional services.
That could be wishful thinking on the part of Roku. Its shares ended the week at $108.05, down from a high of $169.86 two weeks previously.
That followed news that Apple would be offering its online video service free to purchasers of its products, while Comcast will be giving away Xfinity Flex streaming boxes to its internet-only subscribers.
The Roku range of streaming players includes a couple of new additions. The Roku Express is a high definition product that sells for $29.99. The Roku Ultra sells for $99.99 offers support for 4K and HDR.