The dominance of traditional TV is waning as streaming services continue to gain popularity among viewers. According to data from Nielsen, traditional TV usage dropped below 50% for the first time ever in July, with streaming accounting for nearly 39% of viewership. This decline in traditional TV comes as no surprise, as pay-TV providers have been experiencing an accelerated decline in customers. Major providers like Comcast and Charter Communications reported significant drops in pay-TV subscribers during the second quarter of this year.
While streaming services like Netflix, Disney+, Hulu, and Warner Bros. Discovery’s Max have been blamed for the decline of traditional TV, they too are facing challenges. Subscriber growth for larger services like Netflix and Disney+ has slowed, and the rise in prices across the board is an attempt to boost revenue. Streaming companies are shifting their focus from subscriber growth to profitability, as they face the reality of a shrinking traditional TV business. Additionally, advertising and cracking down on password sharing are becoming integral to driving revenue for these streaming platforms.
Traditional TV Usage Falls Below 50% for the First Time as Streaming Dominates
A Shift in Viewership Habits
According to data from Nielsen, traditional TV usage in July dropped below 50% for the first time ever, as streaming continues to gain popularity among consumers. Both broadcast and pay-TV viewing experienced a decline during the month, reflecting the accelerated decline in pay-TV customers reported by companies in their recent earnings reports. However, it is worth noting that subscriber growth for streaming platforms has also slowed down.
The Decline of Pay-TV
Pay-TV usage among customers fell to 29.6% of TV usage in July, while broadcast dropped to a 20% share. On the other hand, streaming accounted for nearly 39% of usage, the largest share reported since Nielsen began reporting these monthly numbers. This decline in traditional TV usage can be attributed to the ongoing trend of consumers cutting traditional bundles and opting for streaming services, a trend that has been further accelerated by the Covid-19 pandemic.
Pay-TV Providers Struggle
Major pay-TV providers, including Comcast Corp. and Charter Communications, have been experiencing quarterly drops in customers. During the second quarter, Comcast lost 543,000 pay-TV subscribers, while Charter lost 200,000. Pay-TV operators reported a weighted average decline of 9.6% in subscribers year over year, resulting in a loss of about 4.4 million households. Macquarie’s report suggests that pricing does not drive upside for pay-TV providers, and the overall number of pay-TV households has steadily declined.
Streaming Services Battle for Dominance
Streaming services such as Netflix, Disney+, Hulu, ESPN+, and Warner Bros. Discovery’s Max have become the preferred choice for many viewers. However, even these services are facing challenges in terms of subscriber growth. Larger services like Netflix and Disney+ have experienced slower growth, while newer apps like Paramount+ and Peacock have seen more member growth but have smaller subscriber bases. As a result, streaming companies are shifting their focus from subscriber growth to profitability, especially as the traditional TV business continues to shrink.
Rise in Prices and Changes in Content Strategies
One of the factors that led consumers to leave traditional TV bundles was the high cost. However, streamers are also raising prices across the board, including ad-free subscriptions for Disney+ and Hulu. This price increase is aimed at boosting revenue. Despite this, lackluster streaming subscriber growth has made it challenging for streaming services to achieve profitability. As a result, these companies are increasingly relying on advertising revenue and cracking down on password sharing. Additionally, cutting content expenses, particularly for original programming, has become a significant part of the cost-cutting strategy.
In conclusion, the decline of traditional TV usage below 50% highlights the ongoing shift in viewership habits towards streaming. Pay-TV providers are facing significant challenges as they experience drops in subscribers, while streaming services are battling for dominance and profitability. The rise in prices and changes in content strategies are strategies employed by streaming services to overcome these challenges. As streaming continues to grow, it remains to be seen how the industry will evolve and adapt to the changing landscape.
- Traditional TV usage fell below 50% in July for the first time ever, as streaming continues to gain popularity.
- Pay-TV providers are experiencing quarterly drops in customers, leading to a decline in pay-TV households.
- Streaming services are facing challenges in terms of subscriber growth, leading them to focus on profitability instead.
- Price increases and changes in content strategies are being implemented by streaming services to boost revenue and cut costs.