Cord-Cutting Could Cost Pay TV Industry $1 Billion in a Year, Study Says

By Aarthi Rayapura September 29, 2016

By Shalini Ramachandran

Pay-TV providers could lose nearly $1 billion in revenue as 800,000 customers cut the cord during the next 12 months, according to a new study from the firm cg42.

The results, which are based on an online survey of 1,119 U.S. customers, estimates that pay-TV providers could lose about $1,248 per cord-cutter annually. That’s because the average cord-cutter saves $104 a month—about 56% of their bill—from dropping cable TV.

Some analysts say that if consumers ditch cable TV they could wind up paying even more for the combination of stand-alone high-speed internet and streaming services. But the study found the opposite: that going without pay-TV service yields savings. That’s in part because people tend not to spend much more than $15 on streaming services even after cutting the cord.

A “cord-haver” spends about $187 a month on average before cutting the cord, including cable TV, phone, internet access and streaming services. Meanwhile, a typical “cord-never”—someone who never had a pay-TV connection—spends about $71 on streaming services and home internet combined. The average cord-cutter spends $83.

“The consumer is discovering they don’t need the mean, evil cable company to get the content that they want, and they can get it for a better deal,” said Steve Beck, managing partner at cg42.

A $1 billion loss of revenue is small for the entire pay-TV industry, but it is a warning sign.

According to the survey, the vast majority of people who cut the cord or never had pay TV in the first place don’t exactly yearn for traditional television, despite the draw of live sports. About 83% of cord-cutters surveyed said they can access “most or all” of the content they want to watch without a pay-TV subscription, and about 87% of cord-nevers said the same.

Their contentment without cable or satellite “increases the longer they are away from paid-TV,” the study said.

Read the full article on the Wall Street Journal

And Zuora CEO Tien Tzuo’s views on Why the Cord-Cutters are Saving the Cable Industry.