NEW YORK—A New Year resolution for many U.S. households is apparently to cut the cord for cable TV subscriptions. According to a new study by The Trade Desk, 27% of U.S. cable TV subscribers plan to end their subscriptions by the end of 2021, which is nearly double from the 15% that did so in 2020 and a big jump from the 3% annual decline that eMarketer reported prior to 2020.
Multiple factors that lead back to the COVID-19 pandemic are contributing to this rise in cord-cutting, per The Trade Desk. With more people working from home, budget pressure for many and broader availability of streaming services, streaming consumption now accounts for 68% of TV viewing versus 28% for traditional TV viewing.
What is widely seen as the biggest draw for traditional TV, live sports, is seeing its importance waning. The Trade Desk found that only 30% of U.S. consumers cite live sports as a reason to maintain their cable TV subscription; Trade Desk says nine months prior that number was at 60%. Since the pandemic, Trade Desk says that 39% of sports viewers are watching live sports either through Connected TVs or social media.
“COVID has accelerated cord-cutting trends that were already underway, to a point where less than 50% of U.S. households today have a cable subscription. It’s not because U.S. consumers have fallen out of love with TV, but that there are now more convenient ways of consuming it. That even applies to traditional cable mainstays, such as live sports,” said Tim Sims, chief revenue officer, The Trade Desk. “As more broadcasters launch and expand their streaming services, these gaps are only going to widen.”
However, there is still a limit to what people are willing to spend on streaming services. Just above half of U.S. consumers (51%) say they would not spend more than $20 on streaming subscriptions. Also, consumers are more than five-times as likely to prefer free or low-cost streaming TV with ads over services with higher monthly subscription fees with no ads (72% vs. 14%), Trade Desk found.
The Trade Desk also surveyed advertisers to see how this transition from traditional linear TV is impacting their practices. Among those who are reevaluating their strategies, CTV is the primary option to reallocate campaign budgets to. CTV will represent 18% of their advertising spend moving forward, Trade Desk says.
This will likely mean shifts in buying strategies, including making fewer upfront commitments in 2021. Ad buyers are also expected to focus on CTV marketing skills, with 37% intending to hire new talent fluent in CTV. More than half (55%) intend to navigate both linear TV and CTV.
Moving forward, Trade Desk found that the top focus areas for CTV ad buyers will be the shift from a content-first to audience-first approach; a greater focus on integrated, cross-channel strategies; and more focus on non-traditional ad formats.
“The TV ad business is at a tipping point. Advertisers can reach more households via CTV than via traditional linear TV for the first time. That trend is not reversing,” said Sims. “Digitally savvy advertisers recognize the advantages of CTV advertising, including precision measurement, an audience versus content focus and the ability to apply data to all aspects of their TV campaigns. Many are embracing these opportunities, and that also means transforming some of the cultural norms of this industry, including how we think about skills development and ad-buying processes such as the upfronts.”
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