12.6 Cord-cutting and changing viewing habits
8 min read•august 20, 2024
is reshaping the TV landscape. Viewers are ditching cable for , drawn by lower costs, flexibility, and personalized content. This shift is forcing traditional networks to adapt and explore new revenue streams to stay competitive.
Streaming giants like and are battling for subscribers with original content and exclusive deals. Meanwhile, changing viewer habits favor on-demand watching and . This evolution impacts how we consume news and entertainment, challenging the industry to innovate.
Cord-cutting definition and impact
- Cord-cutting refers to the practice of canceling traditional cable or satellite television subscriptions in favor of streaming services or other alternatives
- The rise of cord-cutting has significantly impacted the television industry, leading to a shift in how content is produced, distributed, and consumed
- Cord-cutting has forced traditional cable networks to adapt their strategies and explore new revenue streams to remain competitive in the changing media landscape
Traditional cable vs streaming services
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- Traditional cable television packages often require long-term contracts, bundle channels together, and have limited flexibility in terms of content selection
- Streaming services (Netflix, ) offer on-demand content, personalized recommendations, and the ability to watch on various devices without long-term commitments
- Streaming services typically have lower monthly costs compared to cable packages, making them an attractive option for cost-conscious consumers
Reasons for the rise of cord-cutting
- Increasing costs of cable subscriptions have driven many consumers to seek more affordable alternatives
- The convenience and flexibility of streaming services align with changing viewer preferences for on-demand content and device mobility
- The growing availability of high-speed internet has made streaming services more accessible and reliable for a larger population
- Dissatisfaction with the lack of choice and perceived value in traditional cable packages has contributed to the cord-cutting trend
Demographics of cord-cutters
- Younger generations (Millennials, Gen Z) are more likely to embrace streaming services and forgo traditional cable subscriptions
- Cord-cutting is more prevalent among urban and suburban households compared to rural areas, possibly due to differences in internet accessibility
- Higher-income households are more likely to subscribe to multiple streaming services, while lower-income households may rely on free or ad-supported options
Streaming services landscape
- The streaming market has experienced rapid growth in recent years, with numerous platforms vying for subscribers and market share
- Streaming services have disrupted the traditional television industry by offering convenient, on-demand access to a wide variety of content
- The competition among streaming platforms has led to increased investment in original content and exclusive licensing deals to attract and retain subscribers
Major players in the streaming market
- Netflix, one of the pioneers in the streaming space, has a large global subscriber base and a diverse library of original and licensed content
- Amazon Prime Video, included with Amazon Prime memberships, offers a mix of original series, movies, and licensed titles
- Disney+, launched in 2019, leverages Disney's vast catalog of franchises (Marvel, Star Wars) and classic animated films to appeal to a broad audience
- Hulu, owned by Disney, focuses on current and classic TV shows, as well as original series and movies
- Apple TV+, a newer entrant, has invested heavily in high-profile original content to differentiate itself in the market
Comparison of content offerings and pricing
- Each streaming platform offers a unique mix of original and licensed content, catering to different viewer preferences and demographics
- Pricing strategies vary, with some services (Netflix, Disney+) offering tiered plans based on features like video quality and concurrent streams
- Some platforms (Amazon Prime Video, Apple TV+) bundle their streaming service with other offerings, such as free shipping or device purchases
- Ad-supported tiers (Hulu, Peacock) provide a lower-cost option for viewers willing to watch commercials in exchange for reduced monthly fees
Original content as a differentiator
- In the competitive streaming landscape, original content has become a key differentiator for platforms looking to attract and retain subscribers
- Netflix has invested billions in original series (Stranger Things, The Crown) and movies (Roma, The Irishman) to build a strong brand identity
- Amazon Prime Video has found success with critically acclaimed series like The Marvelous Mrs. Maisel and The Boys
- Disney+ has leveraged its popular franchises to create original series (The Mandalorian, WandaVision) that expand on beloved characters and storylines
- Apple TV+ has focused on high-profile collaborations with respected creators (The Morning Show, Ted Lasso) to establish itself as a destination for prestige content
Changing viewer preferences
- The rise of streaming services has both shaped and been shaped by evolving viewer preferences and habits
- Viewers increasingly value the ability to watch content on their own schedules and across multiple devices
- The abundance of content choices has led to a more fragmented and personalized viewing experience, with algorithms playing a key role in content discovery
On-demand vs linear programming
- On-demand viewing allows users to watch content whenever they choose, without being tied to a fixed broadcast schedule
- Linear programming, the traditional model for cable and broadcast networks, requires viewers to tune in at specific times to watch their favorite shows
- The shift towards on-demand viewing has challenged the relevance of linear programming and forced networks to adapt their strategies (next-day streaming, time-shifted viewing)
Binge-watching and its effects
- Streaming services have popularized the practice of binge-watching, where viewers consume multiple episodes of a series in rapid succession
- Binge-watching has changed the way content is created and released, with many streaming originals designed for extended viewing sessions (cliffhangers, serialized storytelling)
- The ability to binge-watch has led to increased viewer engagement and social media buzz around popular series, but has also raised concerns about the impact on sleep and mental health
Personalization and recommendation algorithms
- Streaming platforms use sophisticated recommendation algorithms to suggest content tailored to each viewer's preferences and viewing history
- Personalization helps viewers discover new content and keeps them engaged with the platform, increasing the likelihood of continued subscription
- Recommendation algorithms can also shape viewing habits and influence the popularity of certain titles, leading to a feedback loop of content creation and consumption
Impact on traditional television
- The rise of cord-cutting and streaming services has had a profound impact on the traditional television industry
- Cable and broadcast networks have seen declining subscriptions and advertising revenue as viewers shift to streaming alternatives
- The changing landscape has forced traditional players to adapt their strategies and explore new business models to remain competitive
Declining cable subscriptions and revenue
- As more viewers cut the cord, cable and satellite providers have experienced a steady decline in subscribers and revenue
- The loss of subscribers has put pressure on networks to find new ways to monetize their content and maintain profitability
- The decline in cable subscriptions has also impacted the bundling model, where less popular channels rely on being packaged with more popular ones for distribution
Adaptation strategies of cable networks
- Many cable networks have launched their own streaming platforms (HBO Max, Paramount+) to compete directly with established players and retain viewers
- Some networks have embraced a hybrid model, offering both traditional cable channels and streaming options to cater to different viewer preferences
- Cable networks have also experimented with new formats (limited series, event programming) and partnerships with streaming platforms to maximize the value of their content
Shift in advertising spending
- As viewers migrate to streaming platforms, advertisers have followed suit, allocating more of their budgets to digital and streaming advertising
- The ability to target specific demographics and measure engagement has made streaming advertising an attractive option for brands
- Traditional television networks have had to adapt their advertising strategies, offering more targeted and interactive ad formats to compete with streaming platforms
News consumption in the streaming era
- The shift towards streaming and on-demand content has also impacted how viewers consume news and stay informed
- While traditional television remains a primary source of news for many, streaming platforms and social media are playing an increasingly important role in news dissemination and consumption
- The fragmentation of news sources and the rise of algorithmically-driven content pose challenges for traditional news organizations and the role of journalism in society
News content on streaming platforms
- Some streaming platforms (Hulu, Peacock) have incorporated live news channels and on-demand news programming into their offerings
- News-focused streaming services (CBSN, NBC News Now) have emerged to provide 24/7 coverage and in-depth reporting
- Streaming platforms have also experimented with news-adjacent content, such as documentaries and docuseries, to engage viewers and provide context on important issues
Social media as a news source
- Social media platforms (Twitter, Facebook) have become a significant source of news and information for many users, particularly younger generations
- The ability to share and engage with news content on social media has changed the way stories spread and are consumed
- However, the prevalence of misinformation and echo chambers on social media has raised concerns about the reliability and impact of news consumed through these platforms
Challenges in reaching cord-cutters with news
- As viewers move away from traditional cable and broadcast television, news organizations face the challenge of reaching and engaging with cord-cutters
- The abundance of content choices and the personalized nature of streaming platforms can make it difficult for news content to break through and capture viewer attention
- News organizations must adapt their content and distribution strategies to effectively reach and inform audiences in the streaming era
Future of television and news delivery
- As the streaming market continues to evolve, the future of television and news delivery will be shaped by a combination of technological advancements, changing viewer habits, and industry adaptations
- The ongoing competition among streaming platforms, the emergence of new business models, and the role of local news in the digital age are key factors to watch in the coming years
- The implications of these changes for the television industry, journalism, and society as a whole will be significant and far-reaching
Predictions for the streaming market
- The streaming market is likely to see continued growth and competition, with new entrants and consolidation among existing players
- The increasing importance of original content and exclusive licensing deals may lead to higher costs for platforms and potentially higher prices for consumers
- The role of bundling and aggregation services may become more prominent as viewers seek simplicity and value in the face of multiple subscription options
Potential for new business models
- The streaming era may give rise to new business models, such as ad-supported streaming, transactional video-on-demand, and hybrid subscription-advertising models
- Partnerships between streaming platforms and traditional media companies, as well as with technology and e-commerce firms, could create new opportunities for content distribution and monetization
- The integration of streaming with other services (gaming, music, e-commerce) could lead to new forms of bundling and ecosystem-based competition
Implications for local news and journalism
- The shift towards streaming and digital media consumption poses challenges for local news organizations, which often rely on traditional television advertising and cable carriage fees
- The decline of local news could have significant implications for community engagement, government accountability, and the health of local democracies
- Innovative approaches to local news delivery, such as digital-first newsrooms, nonprofit models, and partnerships with streaming platforms, may be necessary to ensure the sustainability and impact of local journalism in the streaming era
Key Terms to Review (18)
Advertising revenue decline: Advertising revenue decline refers to the decreasing income that media companies, including television networks, receive from advertisers due to changing consumer behaviors and preferences. This decline is closely linked to trends like cord-cutting, where viewers move away from traditional cable television to streaming services, significantly altering how and where advertisements are placed and consumed.
Binge-watching: Binge-watching is the practice of consuming multiple episodes of a television series in a single sitting. This phenomenon has gained significant popularity with the rise of streaming services, allowing viewers to watch entire seasons at their own pace. The convenience of on-demand viewing has transformed traditional viewing habits, leading to a shift in how audiences engage with content.
Cord-cutting: Cord-cutting refers to the trend of consumers canceling their traditional cable or satellite television subscriptions in favor of internet-based streaming services. This shift has been driven by the increasing availability and popularity of over-the-top (OTT) platforms, which offer viewers a wide range of content without the need for conventional cable packages. As a result, cord-cutting reflects changing viewing habits, where audiences are prioritizing flexibility, affordability, and on-demand access to entertainment.
Disney+: Disney+ is a subscription-based streaming service owned by The Walt Disney Company, launched in November 2019. It offers a vast library of content from Disney, Pixar, Marvel, Star Wars, and National Geographic, providing viewers with access to classic films, new original series, and exclusive releases. The platform has significantly changed how audiences consume media, making it a prominent player in the landscape of over-the-top content and altering traditional viewing habits.
Gen Z Consumption Patterns: Gen Z consumption patterns refer to the unique behaviors and preferences of the generation born between 1997 and 2012, particularly regarding how they engage with media and entertainment. This generation tends to favor streaming services, social media platforms, and on-demand content, often moving away from traditional cable television. Their viewing habits are influenced by the desire for authenticity, community, and instant access to diverse content, leading to a significant shift in how media is consumed.
Hulu: Hulu is a subscription-based streaming service that offers a wide range of TV shows, movies, and original content, allowing users to watch on-demand via the internet. Known for its extensive library that includes current and past television series from major networks, Hulu plays a significant role in the rise of over-the-top (OTT) content delivery and has influenced viewer habits by providing an alternative to traditional cable television.
Increase in online streaming by x%: An increase in online streaming by x% refers to a significant rise in the consumption of video content through internet-based platforms, indicating a shift in viewer preferences and behaviors. This trend showcases how audiences are moving away from traditional cable television towards more flexible, on-demand streaming services. This change reflects the growing popularity of subscription-based models and ad-supported content, influencing how news and entertainment are produced and consumed.
Iptv: IPTV, or Internet Protocol Television, refers to the delivery of television content over the internet rather than through traditional means like satellite or cable. It enables viewers to stream shows and movies directly from the internet on various devices, reflecting a significant shift in how audiences consume media and prompting changes in viewing habits and subscription models.
Media consumption theory: Media consumption theory is a framework that explores how individuals and groups engage with media content and the impact it has on their attitudes, beliefs, and behaviors. It connects to changing viewing habits, particularly in the context of cord-cutting, where consumers are shifting from traditional cable television to digital streaming platforms, influencing how they consume news and entertainment.
Millennial Viewers: Millennial viewers refer to individuals born between 1981 and 1996 who are currently in their late teens to early thirties and have distinct viewing habits shaped by technology and cultural trends. This demographic tends to favor streaming services over traditional cable television, seeking content that is easily accessible, on-demand, and often personalized to their interests. Their preferences reflect a broader shift in viewing behavior towards digital platforms, impacting the landscape of television consumption and media production.
Netflix: Netflix is a leading subscription-based streaming service that offers a vast library of films, television series, documentaries, and original content. It revolutionized the way audiences consume media by providing on-demand access to a diverse array of programming without the need for traditional cable subscriptions. As a pioneer in the over-the-top (OTT) streaming market, Netflix has significantly influenced viewing habits and contributed to the trend of cord-cutting among consumers.
OTT Platforms: OTT platforms, or Over-the-Top platforms, are streaming services that deliver video content directly to viewers over the internet, bypassing traditional cable or satellite television. This model allows for greater flexibility in viewing habits, as consumers can watch content on-demand across various devices without being tied to a cable subscription. The rise of OTT platforms has significantly contributed to cord-cutting trends, reshaping how audiences engage with television and film content.
Smart TVs: Smart TVs are internet-enabled television sets that allow users to stream content, browse the web, and access various applications directly on their screens. They represent a shift in how viewers consume media, blending traditional television viewing with internet connectivity to cater to changing habits and preferences.
Streaming services: Streaming services are platforms that deliver video or audio content over the internet in real-time, allowing users to access a wide variety of media without the need for traditional broadcast or physical media. They have transformed how audiences consume content, offering on-demand access to movies, shows, and music while altering the landscape of media ownership and consumption habits.
Subscription-based model: A subscription-based model is a business strategy where customers pay a recurring fee at regular intervals, typically monthly or annually, to gain access to a product or service. This model has gained prominence as traditional media consumption shifts toward digital platforms, allowing viewers to access content on-demand without the need for cable subscriptions. As consumers increasingly cut the cord and seek personalized viewing experiences, this model has become a key player in reshaping the media landscape.
Time-shifting: Time-shifting refers to the practice of recording television programs for later viewing, allowing viewers to watch content at their convenience rather than during the original broadcast time. This change in viewing habits has become more prevalent with the rise of digital video recorders (DVRs), on-demand services, and streaming platforms that enable users to access previously aired content whenever they choose. Time-shifting empowers audiences to manage their viewing experiences and aligns with the growing trend of on-demand media consumption.
Uses and gratifications theory: Uses and gratifications theory is a communication theory that explores how individuals actively seek out media to satisfy specific needs and desires. This theory emphasizes the audience's role in interpreting and using media, focusing on the reasons why people engage with different forms of media, including entertainment, information, and social interaction. It highlights how users choose media based on their personal goals, such as relaxation or social connection, which is increasingly relevant in today's digital landscape where interactivity and changing viewing habits play a significant role.
Video on Demand: Video on Demand (VOD) is a digital streaming service that allows users to access and watch video content whenever they choose, without being restricted to a scheduled broadcast time. This on-demand viewing model has transformed the way audiences consume media, providing flexibility and convenience compared to traditional television viewing. With the rise of over-the-top (OTT) platforms, VOD has become a staple feature that appeals to viewers looking for personalized content experiences.