While Roku obviously has a great deal of skin in the game, the insights and projections in its annual Cord Cutting report — based on an extensive survey of the general population (7,000 respondents) and its own users (12,150 respondents), its user behavioral data, and qualitative research — is well worth reviewing.
This time, Roku is predicting that about 60 million TV households will be accessing video on TVs exclusively through streaming by the end of 2024. If that transpires, it would mean streamers would surpass traditional pay TV viewers for the first time.
In line with other studies and data, Roku concludes that cord cutting is accelerating “far beyond previous expectations.” Its data indicates that about 3.5 million U.S. households dropped cable or satellite in favor of streaming between March 2018 and February 2019. And so far this year, another 2 million have become cord cutters, according to Leichtman Research Group and data compiled from cable and satellite company public filings, cited by Roku.
The report includes a wealth of specific insights into so-called cord shavers, cord traditionals and cord nevers, as well as cord cutters.
*Cord cutters: About 23.8 million households currently, with an average age of 47. Nearly half (47%) spend five or more hours watching TV on weekdays, and 82% say they’re satisfied with their services.
*Cord shavers: About 30.2 million households have reduced their pay-TV packages in the last two years. This segment also has an average age of 47. Nearly three quarters (74%) spend five or more hours watching TV on weekdays, and 37% say they’re planning to cancel pay TV. This year’s study indicates that most cord cutters were previously cord shavers.
*Cord traditionals: 55.5 million households that have traditional cable, satellite or pay-TV packages and have not reduced those packages in the last two years. More than two-thirds (68%) spend five hours or more watching TV on weekdays. Roku describes them as “tech averse.”
*Cord nevers: 6.4 million households have never paid for a traditional cable, satellite or pay-TV package. Their average age is 32, and only 39% spend five hours or more watching TV on weekdays. These viewers are more likely to be female.
For the detailed profiles of these segments, I refer you to the full document download.
But the report also lays out more insights about the underlying dynamics behind the shift to streaming.
These, according to Roku, are the five core reasons for the trend’s acceleration:
Reason #1: vMVPDs that are providing network and live programming. That’s serving as “a bridge for consumers who want to cut the cord, but don’t want to miss out on the traditional live TV that cable/satellite offer,” notes the report. “Specifically, when cord shavers are made aware that they can get the same live local channels, including sports, news, reality and top cable channels, with an EPG [electronic program guide] and DVR at a reduced price, their key barriers to cutting the cord go away.”
Reason #2: Streaming content is abundant and high-quality. As we are now reading about every day, subscription-based streaming services, aka SVODs, “are spending billions on award-winning original content this year,” notes Roku.
Reason #3: Viewers are seeking and finding value in advertising-supported streaming services (AVODs). More than a third (36%) have watched a free streaming channel, such as Crackle, YouTube, The Roku Channel or Tubi TV, on their TVs.
Reason #4: Streaming is easy. Nearly three quarters (74%) say that streaming is more convenient than pay TV services, and 89% say that streaming media devices, including TVs, are “really easy to use," according to Roku.
Reason #5: Cable and satellite companies are devoting less effort to trying to retain low-margin video subscribers. Roku cites recent quotes from executives, including this one from AT&T CEO Randall Stephenson: “DirecTV’s rapid subscriber base decline will continue this year as his company lets lower-revenue customers leave the service as their contracts expire.”
Perhaps most thought-provoking are Roku’s observations about the “new generation” of cord cutters.
The research found that live TV is “an essential part” of these consumers’ daily viewing experience.
“Appointment viewing is the key behavioral difference from early adopters, as they like to watch the latest contest shows, reality TV, and live sports when they air” — primarily due to the desire for social interaction associated with the shows, Roku notes.
“Many of the people we spoke with call a friend or family member during or immediately after a live show ends to discuss the latest events. This phenomenon carries over to the workplace, as a means of socializing with colleagues and connecting beyond just ‘shop talk.'"
New-generation use of vMVPDs — that bridge to mainstream adoption — is 43% higher than among the general population of cord cutters. And new-generation usage is 52% higher among cord cutters using YouTube TV, Sling TV or DirecTV. These streaming services have significantly more new-generation cord cutters within the overall cord-cutter segment.
New-gen cord cutters say that AVOD “is a great complement that enables them to achieve their primary goal of reducing cost without sacrifice.” Accustomed to commercials being part of the viewing experience, they see getting fewer, more relevant ads on AVODs as a fair trade-off.
This, in turn, results in higher satisfaction levels than those for pay-TV users, according to Roku.
Half (53%) of new-gens watch more than five hours per day on weekends, and 47% of that group do the same on weekdays. The weekend percentage is 28% higher than that for previous-generation cord cutters, and the weekday percentage is 19% higher.
Content-wise, new-gens are similar to previous cord cutters except for showing far greater frequency of weekly streaming of reality shows (34% greater), national sports (+28%), do-it-yourself shows (+48%) and regional sports (+37%).