Based on a study of 1,119 U.S. customers conducted by management consulting firm cg42, cable and satellite television providers may end up losing roughly $1 billion in revenue over the next year as more consumers ditch premium TV subscriptions for streaming video. According to the Wall Street Journal, the research firm estimates that 800,000 consumers will cut the cord and exclusively utilize Internet-dependent video services like Netflix, Sling TV, Hulu and HBO Now.
The firm estimates that cable and satellite television providers will lose $1,248 per year for each subscriber that switches to streaming services exclusively. On the flip side, consumers will save about $104 a month by ditching premium television subscriptions. However, consumers in large families may have to shift to more expensive Internet packages that have higher data caps to support more hours of streaming video as well as faster speeds to support multiple family members streaming 1080p video at the same time.
According to the survey, consumers that have never subscribed to premium television (cord-nevers) pay about $71 a month for Internet service and streaming services combined. Consumers that were subscribers to premium cable, but already cut the cord pay slightly more at about $83 a month. Alternatively, current premium television subscribers pay an average of $187 a month for access to cable, Internet and phone services.
Not surprisingly, Netflix is used by more than 90 percent of cord-nevers and cord-cutters. After YouTube, Amazon is in a distant third with about 50 percent of the combined groups reporting that they subscribed to Amazon Prime to access Amazon Instant Video. Hulu Plus does well with cord cutters specifically, nearly 60 percent report having a monthly subscription.
It’s possible that consumers are abandoning cable and satellite television services to rising costs. According to a recent study published by Leichtman Research, the average monthly cost for premium television has increased from $73 a month in 2011 to about $103 a month in 2016. In addition, the total percentage of TV households that subscribe to premium television has fallen from 87 percent in 2011 to 82 percent in 2016.
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