How Much Does Cord-Cutting Actually Cost Big Cable?

Image courtesy of JKehoe_Photos

Cord-cutting is, as we know, a real trend. It’s not what the majority of viewers do — huge numbers of consumers subscribe to cable, satellite, or fiber TV service — but it’s definitely on the rise. And one new analysis thinks the cable industry could be losing at least $1 billion a year in revenue from customers who say “so long.”

A new study, the Wall Street Journal reports, estimates that in a 12-month period, at least 800,000 subscribers are going to cancel their pay-TV service, or cut the cord.

Cord-cutting is more of a trickle than a flood, other surveys — and, for that matter, quarterly financial reports — have shown. Companies each tend to lose a few tens of thousands of viewers per quarter, but tens of millions of households still subscribe to something.

Still, those small quarterly losses for each individual company add up across the board. And analysis firm cg42, which ran the study, estimates that pay-TV companies can lose about $1,248 per cord-cutter per year.

Every subscription is different, of course, and each cord-cutter has to look at their own bill, do their own math, and decide what their content budget is going to be.

But cg42, surveying more than 1,000 U.S. customers, found that the average cord-cutter is saving more than $100 a month as compared to what they paid for cable. The average pay-TV subscribe in the study was paying about $187 before they gave up and cancelled services; after cutting the cord, that becomes a monthly average of $83. Meanwhile the “cord-nevers” — mostly younger adults who go out and form households without ever paying for TV, and so who can never cancel it — spend about $71 on the combination of broadband access and streaming services.

More: Does cutting the cord always automatically save you money?

Do the math on those assumptions — $1,248 times 800,000 — and you do indeed come out just shy of $1 billion that the cable industry no longer gets.

“The consumer is discovering they don’t need the mean, evil cable company to get the content that they want, and they can get it for a better deal,” cg42 said. And no, live sports are not alluring enough to change anyone’s minds. 83% of the cord-cutters the company surveyed said they can get most or all of the content they want without a pay-TV subscription; for the cord-nevers, that was 87%.

Also a bad sign for cable: the longer consumers go without, the less they miss it. Especially as workarounds — like next-day viewing online, or purchasing a season of a current show from a service like Amazon or Hulu — become easier, cheaper, and more prevalent.

And yes: Netflix remains the giant elephant in the streaming room. 94% of survey respondents who don’t pay for cable said that they have Netflix subscriptions; Amazon Prime was the next-most-used paid service, hitting about half.

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Cord-Cutting Could Cost Pay TV Industry $1 Billion in a Year, Study Says [Wall Street Journal]