DALLAS—An increasing number of U.S. internet households are characterizing themselves as “cord cutters” according to Parks Associates' latest research from its Video Services Consumer Insights Dashboard.

According to the report, 56 million (46%) of U.S. internet households are “cord cutters,’ while 12 % are “cord nevers,” who have never subscribed to any sort of traditional pay TV.

The Dashboard research service tracks adoption trends and shifts in the video services market, including households who are disconnecting in favor of free-to-air broadcasts or online video services.

Service providers are adapting by offering competitive pricing, bundling options, and hybrid monetization strategies. The rise of ad-supported video-on-demand (AVOD) and free ad-supported streaming TV (FAST) services shows the demand for lower-cost alternatives, and subscription-based platforms continue to experiment with tiered pricing and content exclusivity to retain customers.

"Cord Nevers represent a unique opportunity for streaming providers," said Jennifer Kent, Vice President, Research, Parks Associates. "By definition, this segment of the market has not paid for traditional pay TV, but streaming services have found a way to monetize a segment that has not previously valued subscription video or has grown up in a streaming-first market, with different conceptions of what subscription video should be."

For leading streaming services, many consumers prefer the basic tier with ads over the more expensive premium tier with no ads; as of Q3 2024, 59% of subscriptions across the eight leading SVOD services are basic tier with ads subscriptions:

• MAX (formerly HBO)
• Netflix
• Disney+
• Discovery+
• Paramount+
• Prime Video
• Hulu
• Peacock

To achieve profitability and strike a balance for consumers, many of the most popular services now operate under a hybrid model, offering both ad-free and ad-supported plans to viewers. Ad-based tiers are cheaper for consumers and more profitable for businesses, making them a win-win for both parties, according to the researcher.

"Consumers are worn down from continued spending increases in streaming, while years of high inflation are driving consumers to pare down accordingly," Kent said. "This only intensifies the competition among streaming vendors and will fuel more growth of subscription tiers with ads and free ad-based services."

While some reactions to plans by ESPN, Fox and Warner Brothers Discovery to launch a massive new sports streaming service have focused on how it will accelerate cord cutting, Fox Corporation executive chair and CEO Lachlan Murdoch is stressing that the new venture is targeted to cord nevers outside the pay TV market and that the pay TV market “will remain our dominant customer base for some time to come.”  

Muroch's Feb. 7 comments were made during Fox’s fiscal Q2 2024 earnings call and are notable because they provide the first detailed look at how the companies involved in the JV are approaching the platform and its potential impact on their declining traditional linear TV business. 

Speaking to analysts on the earnings call Murdoch said: “This new and unique digital distribution platform is focused on sports fans outside of existing paid TV offerings. Upon launch in the fall of 2024, the platform will offer a broad suite of sports, including those from a combined 14 linear networks that broadcast sports today.”

“The inclusion of our networks in the platform is consistent with our strategy, being proudly consumer first and distribution agnostic,” Murdoch said. “Across the distribution ecosystem, our traditional Pay TV market will remain our dominant customer base for some time to come. As such, we remain committed to our existing distribution partners, where our strong portfolio of leadership sports, news and entertainment brands thrive in their bundled offerings. This unique new platform opens up a new market for us, one that we at Fox have not accessed before and that we're excited to participate in.”

Later in the call, Murdoch noted that, “the opportunity is huge. And that's really because this sports focused platform is focused entirely on cord -- not cord cutters, but cord nevers. So if you look at the American market, roughly, say, 125 million households in America, and roughly half of those are not within the traditional bundled cable ecosystem. And so the target for this product…is really that universe of, call it, 60 million odd households that currently don't participate in the bundled cable and pay television ecosystem. So we think it's a tremendous opportunity.”

Murdoch also explained that currently the joint venture partners are not looking for additional partners and that they would not have done the deal if they thought it would accelerate the decline of the pay TV bundle.

“We've been working on this for several months,” he said. “We've done lots of sensitivity analysis, and we would not be launching this product if we thought it was going to significantly affect our pay TV affiliate partners, and that's very important to us. We remain, I think, the biggest supporters of the traditional pay TV bundle. We think there's tremendous value in the pay TV bundle for the consumer who wants to get it all at an affordable price. The big bundle is still the best way to get that programming and those brands. So we are confident that this product will be additive and will give us incremental subscribers and not affect significantly the traditional bundle.”

In terms of “the openness to add partners, that's not something that we're considering at this stage,” Murdoch said. “We think that the 14 linear networks that this service offers gives people a tremendous amount of content between ABC affiliates, Fox affiliates, ESPN, ESPN2, ESPN News, the SEC Network, Fox affiliates, Fox Sports 1 and 2, the Big Ten Network, TNT, TBS and others. It's a tremendous offering that covers the majority of the key sports in this country: NFL, NBA, WNBA, Major League Baseball, NHL, et cetera, college, obviously NASCAR and so on. So we think it's an incredibly strong offering and at this stage, we're not contemplating adding partners to it.”

Murdoch also denied that they are seeing any impact of Netflix’s move into sports with the WWE deal: “There’s no impact [from] the Netflix, WWE deal at all. So I don't think that plays a factor in this. And in fact, in how we approach our portfolio of sports rights, we will be aggressively competing in the sports market for sports rights that nothing has changed there. The primary business and value in Fox Sports is competing both for every subscriber in the traditional cable -- pay TV bundle and advertiser viewer and ultimately advertiser. So sports remains a competitive business, which, we -- frankly, we thrive in, and we don't see any difference to that.”

NEW YORK—Though “Cord Cutters” have been a popular group to follow as the traditional TV and streaming landscapes have evolved over the last few years, MRI-Simmons has revealed new research that shows there are a growing number of people who qualify as “Cord Nevers,” Americans that have never paid for a traditional TV connection.

New statistics show that about 31 million U.S. consumers, which represents about 12% of the adult population, fall into the Cord Never category. In 2017 that number was around 9%. Today, the median age for Cord Nevers is 33, while their average household income has increased from $41,500 in 2017 to $52,800 (a 27% increase).

Things may soon change for this group. MRI-Simmons reports that about 27% of Cord Nevers—around 8 million—plan to sign up for a pay-TV service in the next six months. Around 70% say they will subscribe to a traditional service (cable, fiber optic or satellite), while the remaining are looking at streaming TV packages, like Hulu with Live TV, DirecTV Now or Sling TV; among the 18-34 age range, 41% are looking at streaming options.

There are a variety of reasons Cord Nevers say they want to sign up for pay-TV services, with the ability to channel surf high among them, especially for those 35 and older. For those in the 18-34 age group, a good deal on a TV package and the easier ability to watch/find shows are key factors.

“Young people used to say that as soon as they got their first well-paying job, they would sign up for the full suite of traditional TV services,” said Karen Ramspacher, senior vice president innovations and insights at MRI-Simmons. “Today, there are many more options for connecting to TVideo content—so competition for these subscription dollars is fierce. As they grow in numbers and wealth, today’s Cord Nevers definitely represent an opportunity for content providers—but understanding the Nevers’ underlying motivations is essential to targeting them effectively.”

Two year old YouTube TV said it will be available in the top 100 television markets in time for the Super Bowl.

YouTube TV said it is launching in 95 markets on Wednesday, with more to come shortly.

The virtual MVP has been stressing that subscribers can watch their favorite sports events and has been a sponsor of the World Series and the NBA Finals.

“Just in time for the Big Game, you can now pair your heart’s desire for buffalo wings, chips and dip, and potato skins with the full experience of YouTube TV. That’s exciting news for living rooms, cord cutters, and cord-nevers from Bozeman to Gainesville, Anchorage to Yuma, and Erie to Topeka,” Ben Moores, program manager for YouTube TV said in a blog post.

“So prep your game day buffet, get ready for some memorable commercials, and kickback and enjoy the award-winning cable-free live TV service people love. We’re excited and committed to continue making YouTube TV the live TV experience tailor-made for you. And to all our new neighbors and members—welcome to the family,” Moore said.

YouTube TV offers more than 60 networks, including signals from local broadcast network affiliates stations and cable cable channels.

YouTube costs $40 a month. One virtual MVPD competitor, Hulu + Live announced on Wednesday plans to raise its price to $44.99 a month.

NEW YORK--Amplifying a growing trend, 21 percent of U.S. pay TV customers say they subscribe to an online video service from their MVPD, up from 10 percent a year ago, according to a Parks Associates study.

Parks Associates, which based the study on a survey of 10,000 heads-of broadband households in the U.S. in Q3 2017, said the rise is attributed to the increased number of partnerships between pay TV providers and OTT players, citing Comcast’s support of Netflix on the MSO’s internet-capable X1 set-top box platform as a prime example.

[Read: All ‘Major’ TV Networks To Launch OTT, Direct-To-Consumer Services By 2022: TDG]

Comcast, of course, is far from alone in this trend, as Dish Network, Altice USA as well as TiVo’s and Espial’s various cable operator partners have also woven OTT content with traditional TV. That’s also going to be a focus for Charter Communications’ new Worldbox platform.

The study, 360 View: Access and Entertainment Services in U.S. Broadband Households, also found that pay TV subscription rates dropped from 86 percent in 2015, to 77 percent in late 2017. And while 84 percent of pay TV subs get a service from a traditional cable, satellite or telco TV service provider, nearly 18 percent of pay TV homes get a package from an OTT TV provider.

“The number of ‘Cord Never’ households (which have never had pay-TV service) is increasing slowly, but those who have sampled pay TV are testing new alternatives,” Brett Sappington, senior director at Parks Associates, said in statement. “The percentage of those open to cancelling pay TV or minimizing their monthly spend on pay TV is also up. This ongoing shift is affecting all aspects of service design, promotion, packaging, and pricing. As a result, operators are having to reassess their technology and content investments as well as their partnerships and go-to-market strategy.”

This article originally appeared in TV Technology sister publication Multichannel News.