Cord Cutters, Shavers and Nevers, Oh My!

Here at Paywizard, we carried out a survey of more than 6,000 consumers in six television markets in November 2016 – Australia, Brazil, Germany, Singapore, the UK and US – examining consumer attitude to customer experience and TV spending behaviour. We’ve found that customers are taking more of a ‘dip in, dip out’ approach to their TV packages and changing their spending habits due to greater choice and flexibility. In this post, we dig deeper into the cord cutting and shaving phenomenon.

Cutting the Cord

“Cord Cutters” – consumers who have dropped a multichannel subscription without replacing it and most often opt for free Over-the-Air or pay-OTT subscriptions – currently make up nearly 25% of U.S. households according to research firm GfK. While another study conducted by Nielsen found that globally, more than one-quarter of consumers (26%) watch broadcast or VOD programming via subscription streaming services like Netflix, Amazon or Hulu, and nearly one-third of them say they plan to cut the cord to pay TV.

In previous years, affordable pay-TV services, the popularity of free-to-air TV, low broadband penetration, and ongoing cable digitization contributed to the lack of cord cutting outside of North America. However, audiences in Latin America, Europe, Asia-Pacific and beyond are now opting to cut the cord as more and more consumers are changing their TV spending behaviours’ due to greater choice and flexibility.

North America lead the way, with 35% of respondents indicating they pay an online-service provider for programming content. Asia-Pacific wasn’t far behind at 32% while just over one-fifth of online respondents in Latin America and the Middle East/Africa say they subscribe to an online-service provider (21% each) and self-reported usage in Europe hovered at 11%.

Shaving the Cord

Our research – which matches up with industry trends – has also shown that 64% of consumers who have not signed up for a new subscription in the past year say they would cut back on other digital subscriptions or downgrade to a general package to bring down the cost if they were to sign up to a new OTT service. These “Cord Shavers” are willing to reduce the amount they spend on traditional TV, reallocated part of that budget to OTT.

What Cord?

Younger audiences are more likely to churn than older viewers, with one-third of respondents under age 35 having terminated a service compared to just one in eight of those 55 or older. Many millennials also fall into the “Cord Never” category, as they have grown up in the digital age where content is streamed online and see no need to subscribe to traditional pay-TV services.

Saving the Cord

Our research revealed that 46% of subscribers have remained loyal to their provider because of a positive customer experience. This indicates that the best insurance against cord cutting and shaving is for operators to deliver a superior customer experience throughout the entire subscriber journey.

Despite a quickly evolving broadcast media landscape, traditional TV still reigns supreme. However, the number of subscribers cutting and shaving the cord globally, is gaining fast. Both traditional and OTT operators must prioritize the customer experience in an effort to retain subscribers in the long run.

Download our latest research paper, ‘Facing the perils of failed customer experience’ for more insight into consumer TV spending behaviour around the world.