Why People ‘Cut the Cord’

About a quarter of US television households don’t pay for a cable, satellite or telco TV subscription. Why?

MarketingCharts reported on a survey by research company GfK showing cost-cutting as the primary reason for cord-cutting (72%), although 28% said growing accessibility to online programming prompted them to forgo cable or satellite, up from 16% in 2014. It was also revealed that 43% of homes have an Internet-connected TV, 23% have digital media players and 19% own smart TVs.

In its survey of 3,000 U.S. households, GfK also found that those without pay-tv subscriptions fall “fairly evenly” between those who cancelled their subscriptions (‘cord-cutters’) and those who have never paid for television (‘cord-nevers’).

Delving deeper into the data, both cord-cutters and cord-nevers had lower annual incomes, $59k and $47k respectively, than the national average of $65k. Results also indicated, however, that cord-cutters are more likely to subscribe to video-on-demand services and be more active on Internet television (Over-The-Top or OTT) platforms than the national average. Conversely, the cord-nevers are less likely than the general population to have OTT subscriptions.

The survey also found that 17% of US households have over-the-air reception.

Park Associates

Meanwhile, market research firm Park Associates disclosed data showing that 55% of OTT services such as Netflix and Hulu have a subscription-only revenue model in the US..

Park’s OTT Video Market Tracker examined other OTT business models including pay-per-title (transactional), freemium, advertising, and a mix of subscription and pay-per-title. According to the report, ad-based models have declined due to low ad revenues and viewership.

“Services are experimenting with a variety of business models in order to differentiate themselves in this crowded market dominated by Netflix, Hulu, and Amazon. Smaller OTT companies are experimenting with the freemium model in particular,” said Ruby-Ren Bond, research analyst, Parks Associates.

About Larry Greenberg

A former local beat reporter and film critic, co-founder Lawrence Greenberg has more than 25 years’ experience as a writer and public relations executive.

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