Is cable TV on the ropes? Cord-cutting — the practice of ditching a cable or satellite subscription for standalone streaming content — is a lot more popular now than it was in 2013.
A new report from the Video Advertising Bureau measured that the amount of American households with only over-the-top (directly over the Internet, or OTT) access has nearly tripled over the last five years. This doesn’t exactly mean that people are leaving traditional paid TV in droves, however.
The information comes from a presentation entitled “You Down With OTT? An Overview of the Competitive Video Ecosystem,” which the VAB released as a first-quarter 2018 report. The VAB is not exactly an unbiased organization — the company describes itself as “an insights-driven resource for advertisers, committed to quantifying the selling power of premium multi-screen TV content.” However, the company is theoretically neutral on whether that TV content comes via cable, satellite or the Internet.
According to the report, about 71 percent of American Internet users access an OTT service, such as Netflix, Hulu, YouTube, Sling TV or PlayStation Vue at least once per month. The platform of choice for this activity varies from person to person. About 25 percent of users access OTT services through a smart TV; another 25 percent of users access them through a standalone streaming media players. Game consoles and computers each represent 11 percent of the pie, and everything past that is pretty small.
Interestingly, only 3 percent of users prefer to watch content on their smartphones, despite the ubiquity of the platform. (Another page of the report indicates that there are more than 250 million smartphones active in the United States, but only about 155 million smart TVs.)
As you might expect, this has had a significant effect on how many American households have decided to cut the cord entirely. In 2013, about 5 million households relied exclusively on OTT services. In 2017, that number was nearly 15 million.
Granted, the data might be somewhat misleading. The organization did not take cable replacement services, such as Sling TV, PlayStation Vue or YouTube TV into account (for this particular chart, anyway), so the number of households that rely on OTT content could be even higher.
Furthermore — and perhaps more importantly — the amount of OTT households is not strictly equivalent to the number of consumers who have cut the cord. Remember: Young viewers are not particularly interested in subscribing to cable in the first place. (Just check the VAB’s report.) In the past five years, more and more of them have graduated high school or college, and moved into their own homes. Many of them have been exclusive OTT streamers for their entire adult lives so far, and thus had no traditional paid TV subscription to get rid of.
It's also important to keep in mind that the increase of OTT households alone does not seem to be having a catastrophic effect on the cable industry. The vast majority of streaming viewers — 74 percent, according to the VAB report — also have a cable or satellite subscription. This is perhaps not terribly surprising, given that most of the most popular network-specific streaming apps require cable or satellite subscriptions to fully unlock.