Cord-Cutting Could Cost Pay TV Industry $1 Billion in a Year, Study Says

Pay-TV providers could lose nearly $1 billion in revenue as 800,000 customers cut the cord over the next 12 months, according to a new study from the firm cg42. The study, which is based on an online survey of 1,119 US customers, estimates that pay-TV providers lose about $1,248 per cord-cutter annually. That’s because the average cord-cutter saves $104 a month—about 56 percent of their bill--from dropping cable TV. Some analysts say that if consumers ditch cable TV they could wind up paying even more for the combination of standalone high-speed Internet and streaming services. But the study found the opposite -- that going without pay TV service yields savings. That’s in part because people tend not to spend much more than $15 on streaming services even after cutting the cord.

A “cord-haver” spends about $187 a month on average prior to cutting the cord, including cable TV, phone, Internet access and streaming services. Meanwhile, a typical “cord-never” -- someone who never had a pay-TV connection -- spends about $71 on streaming services and home Internet combined, and the average cord-cutter spends $83. “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,” said Steve Beck, managing partner at cg42. A $1 billion loss of revenue is small for the entire pay TV industry, but it is a warning sign. According to the survey, the vast majority of people who cut the cord or never had pay-TV in the first place don’t exactly thirst for traditional television, despite the draw of live sports. About 83 percent of cord-cutters surveyed said they can access “most or all” of the content they want to watch without a pay-TV subscription, and about 87 percent of cord-nevers said the same.