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Income Drives Cord-Cutting, Not Age: Report

Aditya Kishore
10/26/2017

Cord-cutting is not being driven by millennials because they consume media differently, but rather by people with lower household incomes who feel they just canít afford pay-TV. This is the main finding of a new study by researcher Mintel as reported by Advanced Television.

According to Mintel's research, only six percent of households with an income over $50,000 have cut the cord, compared with 18% of households earning less than $50,000. And the majority of these households -- including those who do currently subscribe to pay-TV -- feel they canít afford it.

The research also found that the same percentage (10%) of each age group (millennial, gen X and baby boomer) said their household did not subscribe to pay-TV, supporting the thesis that income rather than age is the key driver for cord-cutting.

Mintel also found that only about a third of those cord-cutters have actually cut the cord, i.e., had a pay-TV service at some time in the past. Two thirds are "cord-nevers," i.e., they have never subscribed to a pay-TV service.

Nor can OTT video services be blamed for cord-cutting, according to the researcher, since households that have pay-TV are in fact more likely to subscribe to multiple OTT video services. Among those who use even one source of online video content, pay-TV penetration is 85%. This actually rises as more OTT services are used, with 98% of those using six or more sources of online video also subscribing to pay-TV.

Non-subscribers are going back to basics; with the majority of them (56%) receiving over-the-air broadcast signals. This is about four times the equivalent percentage for US households as a whole.

Mintel's study is interesting, in that it challenges a fairly widely-held belief in the video business: that younger viewers consume their content differently, and that's why they wonít pay for a cable subscription. Instead, it's really about affordability -- the steadily rising pay-TV prices have led to lower income subscribers simply being priced out of the market regardless of their age segment.

The past decade has been one of the worst in history in terms of economic challenges, and spiraling prices for any commodity or service will result in a shrinking market. Pay-TV is expensive, and people have had to cut back on something.

In the past, pay-TV was the common man's luxury: if you couldn't afford a holiday, you could at least spend an extra fiver a month on a kids' cable package to make it up to the children. But the growing cost breached some kind of tolerance threshold a few years ago, and that has heightened price sensitivity and a tendency to just pull the plug.

At the same time, it's difficult to entirely dismiss preferences for personal devices among younger viewers, as well as a more strident desire for consuming video content off-schedule. I suspect strongly that cord-cutting is a result of several factors: new consumption behaviors and the availability of new OTT options as we believe, but also the crossing of a price threshold, where consumers are just refusing to pay any more.

ó Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation

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Michelle
Michelle
10/29/2017 | 3:31:32 PM
Re: Driven to See Less Commercials
We do something similar -- subscribe to multple commercial free streaming services and one premium channel. We rarely see commercials and it's great. Streaming is far better than regular cable. There are plenty of ads everywhere else...
KBode
KBode
10/27/2017 | 4:11:19 PM
Re: Income and cord cutting
"It's not about price as much as it is perceived value. However, age IS a factor. Cord cutters are predominantly Gen-X, not Millennial. You will find more Millennials in the cord-never group, and it is a much smaller group than the cord cutter group."

This more accurately reflects the data on this subject I've seen to date. It's very consistent. 
Smoochy18
Smoochy18
10/27/2017 | 4:00:18 PM
Income and cord cutting
Hi, Shelley from Channel Master here. This is inconsistent with what we've found. I don't think the questions were asked correctly to determine the published outcome. One of the things that I notice most in these reports that come out, is that the people asking the questions do not have enough knowledge about TV (industry, technology, business models, products, consumer behavior, viewing options) to properly structure the surveys and it produces a lot of innacurate data. Coming from someone who has access to a national database of cord cutters and antenna households, I can tell you that the income level of households who have cancelled pay-TV is very widely dispersed. It's not about price as much as it is perceived value. However, age IS a factor. Cord cutters are predominantly Gen-X, not Millennial. You will find more Millennials in the cord-never group, and it is a much smaller group than the cord cutter group.
JDonahue
JDonahue
10/27/2017 | 2:31:30 PM
Driven to See Less Commercials
We have Amazon, Netflix, Hulu (no commercials plan), Curiosity Stream & HBO and an antenna - $52.mo.  We'd have to spend $100 a month just to reach the tier where we could add on HBO with our local cable co.

We haven't seen a tv commercial in 18 months except during a football or basketball game we might watch which is why we have the antenna, that and local news.

So we're not being penalized $100 just to reach HBO.  We're getting such a surplus of quality commercial free programming that we have 100+ items in a watchlist and yes its costing us less.  We're not spending 15% of our viewing time being dumbed down by commercials.

Cord cutting is a refined consumer choice not an income problem.  Once you cut the cord you're never going back.

 

   

 
Phil_Britt
Phil_Britt
10/27/2017 | 8:05:44 AM
Re: ...
Perhaps.

It's much easier to never use a service like cable than to have it, then try to learn how to do without. As cable costs keep rising, those with fixed or limited income have to consider if they are getting enough additional value out of cable not to cut the cord.
brooks7
brooks7
10/26/2017 | 7:20:35 PM
Re: ... aged based cord cutting.
Actually, I am not sure that there is a real nugget here - depending upon how the question was asked.  The way the story relates it: "Is Age a factor in you cord cutting?"  would seem to get a big no from a 21 year old.

seven

 
KBode
KBode
10/26/2017 | 5:16:45 PM
Re: ... aged based cord cutting.
Studies I've seen also tend to indicate cord nevers sway younger as well, especially considering all the Millennials that are leaving home and then not signing up for service at their first (or second, or third) place of residence:

 

https://motherboard.vice.com/en_us/article/ezvjyn/cord-nevers-are-the-new-cord-cutters
davidhoffman5
davidhoffman5
10/26/2017 | 4:58:40 PM
Re: ... aged based cord cutting.
Previous studies failed to seriously take into account the cord nevers. Those of us who never did the pay for television programming activiity. Cord nevers wer lumped in with cord cutters.

 
KBode
KBode
10/26/2017 | 2:00:17 PM
...
Am I wrong or does that fly in the face of several previous studies that have highly connected age to the tendency to cut the traditional TV cord?
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