Cg42, a boutique consulting firm, has published its latest “2018 Cord Cutter & Cord Never Study,” which builds on several reports by providing an in-depth analysis of both US consumers who opted out of subscription-based Paid-TV service in the last several years (i.e., Cord Cutters) as well as US consumers who have never subscribed to paid-TV service (i.e., Cord Nevers).
This installment, the first of three reports, forecasts that 5.4 million consumers will cut the cord in 2018, a shocking move that could cost the Pay-TV industry $5.5 billion in lost subscription revenue. This is undoubtedly an acceleration of the trend, compared to 4.8 million in 2017, 3.8 million in 2016, and 3.0 million in 2015.
“As the process of finding alternative paths to content gets easier and easier, people are acting on the frustrations they have with traditional providers and leaving,” the study’s lead researcher and cg42 managing partner Stephen Beck told MarketWatch.
MarketWatch said Beck’s consulting firm conducted the online survey in September 2017 of 3,385 U.S. consumers — asking them a series of questions about viewing habits. Thirty percent of respondents said they had opted out of a pay-TV service in the past two years and 18 percent had never subscribed to one.
Cg42 discovered that Netflix, Amazon Prime, and Hulu Plus were among some of the most popular streaming services that Cord Cutters and Cord Nevers used.
The report was published on Monday right before Netflix’s stock crashed, as subscriber growth slowed; its cash burn soared, and financial outlook slashed.
At the end of 2015, for example, Netflix had 75 million subscribers. But its Free Cash Flow was NEGATIVE $920 million.
The following year, Netflix had grown its subscriber base to 93 million. Yet its Free Cash Flow had sunk even further to negative $1.65 billion.
By the end of 2017, Netflix subscribers totaled 117 million. But the company burned through $2.02 billion
Nevertheless, Netflix has managed to attract millions of Americans through its massive debt-fueled binge on premium content. In short, the streaming company had been nominated for a whopping 112 Emmy awards, more than any other network. However, it lost more than $17 million for each of its awards, making it an unstable company.
It seems like Netflix and other premium streaming services are intentionally destroying the existing ecosystem. This is most evident in the collapse of subscribers for pay-TV companies:
“Comcast may lose 7.2 percent of its subscriber base, or around 1.5 million customers this year, costing the company $1.6 billion in revenue, cg42 found. AT&T/DirecTV is expected to lose 4.8 percent of its customers, or more than 1.1 million subscribers for a potential $1.2 billion hit. Cox could lose 7.9 percent of its subscribers, or around 317,000 people, costing the company $324 million,” said MarketWatch.
The report specified that the Millennial and Gen X cohorts are the leading influencer in the cord-cutting phenomenon. A large part of millennials (between 22-37 years of age) identified as Cord Nevers, or people who had never subscribed to pay TV. Hidden prices, excessive channels, limited premium content, outlandish prices, commercials, and hidden charges were some of the top frustration among the younger generations.
If Cg42 is correct, 5.4 million Americans who are most likely stuck in the gig-economy and do not even realize their standard of living is collapsing — could soon be Cord Cutters by the end of the year. Hell, if these broke Americans can save some money before the next recession, then why not?
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Author: Tyler Durden