new study shows a rise in cord cutting – 8.2 percent ditched pay tv in 2014, up 1

24/06/2015 NewStudyShowsARiseInCordCutting8.2PercentDitchedPayTVIn2014,Up1.3%YoY|TechCrunch

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Theres been some debate about how many consumers are actually cutting ties with theirpay TV providers and replacing them withover-the-top streaming media services a trendgenerally referred to as cord cutting. But arecent studyindicates that the number of cordcutters in North America is, in fact growing in 2014, 8.2 percent of former pay TVsubscribers surveyed by TiVo subsidiary Digitalsmiths said they ditched their service anincrease of 1.3 percent over the prior year. Meanwhile, a much larger 45.2 percent said theyreduced their cable or satellite TV service during the same time frame.

That latter item is sometimes referred to as cord shaving, as its reflective of the trend

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New Study Shows A Rise In Cord Cutting 8.2 Percent DitchedPay TV In 2014, Up 1.3% YoY

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toward smaller pay TV bundles as consumers spend more time streaming video via over-the-top solutions like Netflix, Hulu or Amazon Instant Video, for example. Pay TV providers arentnecessarily losing these customers, but these subscribers are reducing their reliance on theircable and satellite television offerings as they adopt streaming services. And insome cases,dropping down to a smaller pay TV package isthe first step in becoming a true cord cutter.

The survey was based on a demographically representative sampling of 3,144 consumers inthe U.S. and Canada, ages 18 and older. And while its numbers referencing cord cutters arenotable, its worth remembering thatits a survey as opposed todata from service providers there could be discrepancies between what consumers say and what they actually do.

For instance, 15.3 percent ofconsumers respondedthat they plan to either switch (3.1percent), change (7.4 percent) or cut (4.8 percent) their pay TV service. More importantly,32.4 percent said theyre on the fence about these things, meaning theres an opportunityfor pay TV providers to retain their business by offering new functionality like better userinterfaces on their set-top boxes, or the option to stream to smartphones and tablets.

The reduced consumer loyalty forpay TV providers was attributed to high prices and badchannel selection.



71.7 percent said that cable and satellites increasing fees left them unsatisfied. 38.1 percentsaid these companies offered poor customer service, and 33.8 percent said bad channelselection was to blame. By bad, consumers could be referring to an overabundance ofchannels that they never want to watch, or it could also be related to the fact that its difficultfor them to find the programming they actually like due to lack of decent search options orbettertargetedrecommendations.

Lately, some pay TV providers have begun going afterthe cord-cutting crowd with a la carteofferings which allow them to personalize their channel line up. For instance, Cablevisionlaunched cord cutter packages in April and Verizon (disclosure:AOL/TechCrunch parentcompany) introduced a la carte packages this year, too.

Survey respondentssaid they were interested in these sorts of options 81.6 percent saidthey want to pick the channels they watch, and an ideal price point was, on average, $38 permonth.

The so-called skinny bundles are reflective of a changing mindset about the value of pay TVand its many, many channel options. 33.4 percent say their overwhelmed with the number ofchannels available and most (81.7 percent) only watch between 1 and 10 channels. Many inthat group (39.7 percent) watch 5 channels or fewer.



In addition to pay TV providers move to embrace a la carte programming,Dish launched itsown over-the-top streaming TV service called Sling TV that provides a basic cable bundle fora reduced fee. And thereareother ways to access network TV programming without cable,too, including via Hulu, CBS All Access and PlayStation Vue, for example.

Consumer awareness around these cable alternativesis growing. Over half (55.7 percent) ofrespondents were familiar with one or more of these services, with Hulu being the best-known with a 51 percent mindshare. Sling TV followed with 11.9 percent awareness, thenPlayStation Vue (11.4 percent) and CBSs offering (10.5 percent).

Meanwhile, other streaming services like Netflix and Amazon Prime Instant Video offer moreways to watch movies and TV, even if they dont include all the currently airing programs.

As of Q1 2015, 54.4 percent of respondents said they were leveraging a monthlysubscription service like Netflix or Hulu, and the largest group of respondents (33.1 percent)said they watched 1 to 5 hours of content on these services each month. However,consumers are beginning to increase their time spent on these services there was 2.3



percent quarter-over-quarter growth in respondents who watch 15 to 30+ hours.

Their willingness to pay a little more is growing too. While most (51.8 percent) pay between$6 and $11 per month, the $9 to $11 category grew 2.5 percent year-over-year and is up 6.1percent over Q1 2013. And the$12 to $14 category grew 2.2 percent year-over-year, and isup 4.2 percent over Q1 2013.

The draw of these services arent just the reduced cost, though 51.1 percent cited that as afactor in their use. Theyre also seen as more convenient (60.1 percent agreed on this), withbetter selections of content (38 percent said).

Whats interesting though is that people are also enjoying the way these services let themwatch TV instead of waiting for new episodes, many are now binge-watching shows, or atleast are happy to beable to access a full season of programming at once. This featurewascited by 47 percent of respondents as being a big draw for the over-the-top services.



Digitalsmiths has been running itssurveys since 2012, however,it was only last year that itbegan tracking consumers interest in cutting the cord entirely.But now that the metric isbeingtracked, moredata on this trend will be available in future studies.

This was post #9 in an ongoing series about cord cutting in 2015 which examines trends aroundcord cutting and reviews new services that aid inditching pay TV. You can read more of the serieshere:



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new study shows a rise in cord cutting – 8.2 percent ditched pay tv in 2014, up 1

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