Cut the Hype about Cutting the Cord!

Google “tech disruption” and you’ll be served more than 42 million results in under a second. Disruption is clearly a core narrative of our age, one with an almost predictable story arc, reverberating in the media daily.

But not all tech disruption is created equal.

Take TV. It’s experiencing an exhilarating pace of evolution in both U.S. video distribution dynamics and the U.S. video ad marketplace, but some commentators are projecting a new wave of disruption, where we all cut our cords and stream straight into the future. For years, the echo chamber has reverberated with predictions of the impending demise of the TV industry due to cord-cutting and households canceling their wired cable, satellite or telco subscriptions in favor of streaming.

That’s how eMarketer sees it. According to its recent study, consumers are kicking their cable boxes to the curb in ever increasing numbers as streaming video supplants TV, resulting in a mass cord-cutting that will also cut the flow of U.S. TV ad dollars.

Through our own extensive work in all things streaming, we’ve learned that the rapid growth in streaming is overwhelmingly driven by the desire for more TV content, not less TV.

Sounds serious! But, just how big is this mass exodus from TV that we keep hearing about?  A ten per cent yearly drop? 15? As high as 20?

How about less than 1 per cent? Yes, that’s right. That’s the percentage of TV households that “cut the cord” in the last full year of comparative data (2016 vs. 2015).

One per cent certainly doesn’t add up to a sudden mass consumer revolt. Through our own extensive work in all things streaming, we’ve learned that the rapid growth in streaming is overwhelmingly driven by the desire for more TV content, not less TV. In fact, a streaming subscription is almost always added to a TV subscription.

It’s not a TV replacement. In fact, it’s quite far from it. OTT/streaming subscribers watch an average of five times more TV content than OTT content! The heaviest streamers are still watching eight times more TV than streaming content, while the lightest TV viewers are watching fifteen times more TV a day than streaming video. Finally, just five per cent of TV households account for 90 per cent of all streaming time.

It’s clear to anyone looking at the facts that streaming is all about more TV content.

And that content continues to draw advertisers to television. TV just came through an extremely strong 2017/2018 upfront marketplace that saw high advertiser demand drive new highs in pricing and CPM.

When you cut through the hype and plug into the facts (from independent, well-known syndicated sources), the truth is that multichannel video programming distributor (MVPD) households (wired cable, telco & satellite) have remained steady over the last 15 years, representing 83%+ of households, 98 million homes in 2017. And for the under-the-media-microscope Millennials, we found that the decision to go cordless is tied to income, and is not the result of a Millennial generational shift in attitudes towards media consumption. Many Millennials re-engage with MVPDs as their life stages and incomes mature.

So, while eMarketer raised an issue that’s top of mind for many, we feel their conventional wisdom missed the mark. When you read it, make sure to compare it to data and conclusions in our study, “Cutting to the Chase.”  As you disconnect from speculation and delve into the facts about cord cutting, you’ll see that a complex, nuanced narrative of tech disruption is unfolding with TV securely at the center, driving the narrative forward.

Sean Cunningham

President & CEO at Video Advertising Bureau
Sean Cunningham is the President and CEO of the Video Advertising Bureau, a market intelligence group helping advertisers make informed decisions about the expanding world of premium, multiscreen content. For more insights, visit www.thevab.com  follow @VideoAdBureau on Twitter or visit @VideoAdvertisingBureau on Facebook.

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