Cord cutting on rise as ‘I can watch online’ becomes buzzword

By Jim O'Neill on Jul 27 2015 at 10:45 AM
Cord cutting on rise as ‘I can watch online’ becomes buzzword

It was only a few years ago that we – as an industry – had as our goal the delivery of online video to the living room. Well, been there, done that, a new study says.

More than half (54%) of all U.S. TV households with kids under age 18 now watch OTT on a TV set; the overall national average is a respectable 40%.

“The old stereotype of an OTT viewer hunched over a laptop or tablet is very much out of date,” said David Tice, SVP in researcher GfK’s Media and Entertainment practice, which produced the survey.

“Rapid adoption of smart TVs and digital media players over the past three years has pushed OTT to the biggest screens in the home,” he added, “with attendant expectations from consumers that OTT quality should be as good as regular TV service, and as easy to use as mobile OTT options.”

GfK’s 2015 Ownership and Trend Report also showed that using streaming video is now the third most common online activity, behind social networking and online shopping. This means that streaming is now reported to be more prevalent than listening to music online, instant messaging, and Internet gaming.

There’s some very interesting data in the report that suggests cord cutters watch significantly move SVOD than cord-nevers or the general population and that they’re extremely likely to watch over-the-top video (more at that later).

The study also shows 53% of households with at least one member of Generation X (roughly ages 35 to 49) use an Internet-connected TV as do 58% of  HHs with an 18- to 34-year-old.

GfK also reported that Hispanics (42%) and whites (40%) are at roughly the national average in their OTT use, while African Americans (29%) are significantly below. In terms of devices, Hispanics are much more likely than whites to use smart TVs and videogame systems for streaming OTT content to a TV set.

GfK’s got a great infographic with more pullouts from its report that you can download here.

Streaming devices are the future

GfK said nearly one-quarter (23%) of households use a digital media player, like an Apple TV, Roku or Amazon Fire TV, to stream to a TV, compared to only 18% that use a game console and 14% who use a Smart TV.

Pundits have long suggested that Smart TVs were not going to be the choice of the OTT generation; the replacement cycles on TVs were too long to stay current with evolving technology. Likewise, game consoles.

But Streaming media devices that cost less that $100 remain the easiest, most affordable method of accessing streaming services on a variety of devices.

The study also found that about one-third of households subscribe to an SVOD service, including Netflix (29%), Amazon (12%) and Hulu (6%).

Cord cutting is a growing problem

The news remains less-than favorable for pay-TV operators, as the percentage of homes that have cut the cord has increased since 2011.

The “typical” cord cutter, someone who’s stopped paying for traditional TV, looks something like this, GfK said:

  • Average income of $55,000.
  • 50% subscribe to at least one SVOD service.
  • 59% watch OTT on a TV set. And,
  • 40% have kids in the household.

Of the three major reasons cited for cutting the cord, cost-cutting, at 74%, remains No. 1; That pesky value proposition (as in “not enough”) was at No. 2 with 54% of respondents mentioning it.

But the No. 3 most-cited reason (with a bullet), “I can watch it online,” was cited as a reason to cut the cord by more than one-quarter (26%) of respondents, up a rocking 10% since 2014.

Cord nevers, meanwhile, someone who has never paid for traditional TV, look like this:

  • Average income of $49,000.
  • 25% subscribe to SVOD.
  • 35% watch OTT on a TV. And,
  • 29% have kids in the household.

Compare that to the total U.S. population:

  • $63,000 average income.
  • 34% subscribe to SVOD.
  • 41% are active OTT viewers on a TV set. And,
  • 32% have kids at home.

Stay tuned.

Follow me on Twitter @JimONeillMedia and on LinkedIn

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