For the First Time Ever, Linear Pay TV Drops Below 50% in US

The cord-cutters have taken over. In 2022, for the first time ever, the proportion of U.S. households that subscribe to traditional pay TV services dropped below 50%, according to Insider Intelligence. The company said by the end of the year, only 65.1 million households in the U.S. still had traditional pay TV, which was down 9% from 2021 for a total of 49.7%. Insider Intelligence—which makes its predictions and estimates for pay TV and OTT based on analysis of survey and web traffic data from research firms and regulatory agencies, historical trends, sales projections, reported subscriber numbers and several other factors—previously predicted in September 2022 that traditional pay TV wouldn't drop below 50% until 2023. Now, the forecast states that pay TV will drop another 7.1% this year to 60.5 million. And by the end of 2027, the company said the number will only be one-third (34.9%) of the country. How the Streaming Shift Has Shaken Up TV Marketing "Our estimates show that U.S. pay TV households started a negative trend in 2015 and haven’t looked back. It’s been a slow, steady and unmistakable downward progression, and we don’t expect it to change direction again," Paul Verna, principal analyst and head of advertising and media practice at Insider Intelligence, told Adweek. In addition to those trends, Verna noted that the demographics clinging to traditional platforms are aging, and programming that previously kept people tethered to legacy systems, including live sports, is increasingly heading to streaming. For instance, Thursday Night Football moved from Fox to Amazon in a multi-billion-dollar deal, and Apple TV+ is in the midst of pushing MLS Season Pass. Overall, cord-cutters are leading the charge in the number changes, with cord-cutting households climbing 17.7% to 43 million in 2022. By the end of 2023, the number is expected to grow another 10.8% to 47.6 million. And by 2027, the figure will reach 60 million, around 44.1% of U.S. households, far eclipsing pay TV. Life is but a stream Looking at estimates of individual users in the U.S. on streaming and digital platforms, which may or may not include paying subscribers, Insider Intelligence notes that YouTube leads with 236.1 million individual viewers this year. Among the subscription-only services, Netflix leads with 170.6 million viewers, though the company is expecting a slight drop in Netflix viewership as the streaming giant cracks down on password sharing, with positive growth returning in 2024. Amazon trails with 157.3 million users, followed by Hulu with 127.8 million and Disney+ with 112.7 million. HBO Max had 89.7 million users ahead of Warner Bros. Discovery combining the service with Discovery+ this year. And the company said Paramount+ is overtaking Peacock, with NBCUniversal's streamer currently sitting at 69.9 million. "With each of the top 5 OTT video services catering to well over 100 million viewers (and over 200 million for market leader YouTube), it’s easy to see why traditional and digital TV are moving in opposite directions," Verna said. Though, despite the changing tides, don't expect a massive shift in upfront spending all of a sudden. After all, it's not unusual for digital media to take years to scale up to traditional counterparts when it comes to monetization. "TV ad spending is still a $60+ billion industry in the US and is expected to stay in that range for at least the next three years," Verna said. "As it continues to hold its own, it remains attractive to buyers who want to lock in discounted rates and flexible terms by committing ahead of time." Verna explained the company's forecast for TV upfront spending, which is due for an update next month, calls for a modest increase in 2023.

Streaming & OTT

Linear Pay TV Drops Below 50% in US for First Time Ever

The cord-cutters are leading the way, according to Insider Intelligence

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