In today’s digital age, the decline of traditional television continues its downward spiral. According to Nielsen’s monthly streaming report, The Gauge, total traditional TV usage, including both broadcast and pay-TV, dropped below the 50% mark for the first time ever in July. The numbers speak for themselves – usage among pay-TV customers fell to 29.6% of TV, while broadcast dropped to a 20% share during the month. Meanwhile, streaming accounted for nearly 39% of usage, marking the largest share reported since Nielsen began tracking these monthly numbers in June 2021.
Streaming services have played a significant role in reshaping the television landscape. The rise of platforms like Netflix, Disney+, Hulu, and HBO Max has disrupted the traditional TV model, leading consumers to cut the cord on cable subscriptions and turn to streaming options. This shift in consumer behavior has only been amplified by the ongoing Covid-19 pandemic, which has accelerated the adoption of streaming services.
As a result, major pay-TV providers such as Comcast Corp. and Charter Communications have experienced quarterly drops in customers. In the second quarter alone, Comcast lost 543,000 pay-TV subscribers, while Charter lost 200,000. Tim Nollen, a senior media tech analyst at Macquarie, expressed his concern over the state of linear TV, stating, “We think the metrics for linear TV are all bad.”
The decline in pay-TV subscribers has been a significant challenge for traditional providers. According to Macquarie’s report, pay-TV operators reported a weighted average decline of 9.6% in subscribers year-over-year. This translates to a loss of approximately 4.4 million households. Moreover, the overall number of pay-TV households has steadily declined, with the second quarter of 2022 seeing a decrease to 41 million households compared to 45 million and 50 million during the same periods in 2021 and 2020, respectively.
The rise of streaming services is often blamed for the downfall of pay-TV. However, the very streaming companies taking over the market face their own challenges. While subscriber growth for larger services like Netflix and Disney+ has slowed down, fledgling apps such as Paramount+ and Peacock have seen modest growth despite their smaller subscriber bases.
One of the primary reasons consumers abandoned traditional TV bundles was their high cost. Unfortunately, streamers are now also raising prices across the board to boost revenue, including Disney’s ad-free Disney+ and Hulu subscriptions. However, these price increases have not translated into substantial growth in streaming subscribers, making profitability a key concern for streaming companies. Macquarie’s report highlights the need for alternative revenue streams, such as advertising, as well as cracking down on password sharing.
In their pursuit of profitability, streaming companies have also shifted their focus away from producing expensive original programming. Licensed programming, especially from traditional outlets, often attracts a large audience. For example, Netflix experienced a boost in viewership with the addition of the popular series “Suits,” originally aired on NBCUniversal’s USA Network.
The Future of Television
The television landscape is continually evolving, and the dominance of streaming services shows no signs of slowing down. As viewers increasingly turn to streaming platforms for their entertainment needs, traditional TV providers need to adapt and find new ways to stay relevant. This may involve reevaluating their pricing strategies, investing in original content, and exploring partnerships with streaming services. Ultimately, the future of television lies in the hands of those who can adapt and embrace the changing preferences of viewers.
The decline of traditional TV usage, coupled with the rise of streaming services, has ushered in a new era of television consumption. While pay-TV providers face significant challenges, streaming companies are also grappling with issues of subscriber growth and profitability. The changing landscape of television presents both opportunities and obstacles for companies in the industry. Only those willing to innovate and meet the evolving demands of viewers will succeed in this ever-changing landscape.