Market Insight

The pay TV conundrum: cord shavers, cord cutters and cord nevers

September 11, 2018

Fateha Begum Fateha Begum Associate Director, Television Media

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Highlights

  • According to the latest IHS Markit “Connected Devices & Media Consumption” survey, one-third of pay TV households downsized their pay TV packages across the United States.
     
  • While pay TV operators lost more than 7 million subscribers in the past five years, online video subscriptions have increased by more than 100 million over the same period.
     
  • Consumers who downgraded their TV packages – also known as “cord shavers” – subscribed to more OTT video services than other pay TV consumer households. Cord shavers who cited “cheaper alternatives available” or “lack of content” as reasons for downgrading subscribed to an average of 3.7 OTT services, compared to an average of 2.2 OTT subscriptions for all cord-shavers.
     
  • Consumers choosing to cancel their pay TV subscriptions and rely solely on OTT subscriptions, also known as “cord cutters,” are four times as likely to connect a Fire TV device to their primary TV set than all pay TV households, and nearly six times more likely to connect a Roku Stick.

Our analysis

The latest analysis of IHS Markit’s Connected Devices & Media Consumption surveys found that cord shavers are, in fact, content-hungry consumers. They use OTT to complement their pay TV subscriptions, primarily for access to exclusive or original content.

Highlighting a churn risk to pay TV, cord shavers are more likely to connect their devices to their primary TV sets, and are less likely to first turn to their set-top boxes, when looking for something to watch on TV.

Consumers choosing to cancel their pay TV subscriptions and rely solely on OTT subscriptions are mostly cost-conscious consumers. They are twice as likely to subscribe to Sling TV, YouTube TV and other virtual pay TV services than those consumers choosing to complement their existing pay TV subscriptions with OTT subscriptions. In cord-cutting households, digital media-streaming devices from Amazon and Roku are most commonly connected to their primary TV sets.

Consumers in “cord-never” households – those that never had a pay TV subscription, but which subscribe to OTT video services – have a stronger preference for viewing video on mobile devices. They were also less likely to stack video services and more likely to have specific content in mind, when looking for video content to watch.

Cord nevers also have a lower propensity to purchase connectable video devices and subscribe to video services. Dedicated video-streaming device ownership among this group of consumers is largely driven by gifting and promotional offers.

US Pay TV & Online Video Consumers Report

This report focuses on the impact of OTT services and connected devices on video subscriptions in the United States. It analyses the consumption behaviors and drivers of three consumer groups: cord shavers, cord cutters and cord nevers. The analysis builds on latest findings from the Connected Devices & Media Consumption consumer surveys, focusing on a nationally representative sample of 2,401 internet users in the US.

Research by Market
Media & Advertising
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