Smart Screen Exclusive

By Chris Tribbey

Today, nearly 80% of Americans still subscribe to some sort of traditional pay TV service. But the increasing availability of digital alternatives to cable and satellite could result in an unprecedented shift away from traditional services in 2016, according to a new report from PricewaterhouseCoopers (PwC).

The PwC report — “Videoquake 3.0: The Evolution of TV’s Revolution” — predicts that as many as 20% of current cable subscribers could cancel next year, opting instead for streaming and OTT offerings. Sixteen percent of those PwC surveyed have already cancelled their pay TV services this year. And of those who are still subscribing, nearly 25% said they’ve cut back on what they pay for this year.

“Part of this downsizing is the result of traditional providers adding ‘skinny bundles’ to their offerings, slicing and dicing the 500-channel package into customizable and smaller pieces,” the report reads. “This is intended to be a practical — and appealing — solution for consumers who are price sensitive and/or deluged with channels they don’t want and don’t watch.”

PwC’s report found that, on average, pay TV subscribers receive nearly 200 channels, yet only watch 17 on a regular basis. Forty-five percent of current pay TV subscribers said they want customizable, a la carte channel packages, and 56% of those who no longer have a pay TV subscription said they would come back if that option was available.

During the second and third quarters of this year, U.S. pay TV providers shed nearly a million subscribers, according to PwC, and there’s a growing number of consumers (mostly under 35) who’ve never paid for a TV subscription. Five percent of respondents to PwC’s survey fall in the “cord never” category.

“Older consumers, who grew up with free access to limited channels, are more likely to decide that pay TV subscriptions simply aren’t worth the cost, even if that means missing out on some of the best programming,” the PwC report reads. “Younger consumers, on the other hand, don’t see their cord-never approach as sacrificial — to them, there’s nothing that they can’t get elsewhere.

“Their world has been shaped by on-demand streaming, and they’re betting on it to provide all the content they desire.”

PwC found that 77% of 18- to 24-year-olds access TV content on the Internet, 78% of all consumers subscribe to at least one streaming service, and among pay TV subscribers, 70% also subscribe to at least one streaming service.

Looking at those numbers, PwC suggests pay TV companies need to shift more to a la carte, “focus on content discovery to help consumers find and engage with content that’s relevant to them” and “rethink commercials and the value of eyeballs as viewers grow increasingly distracted by multiple devices.”

“By making investments in the consumer experience and offering packages that resonate structurally — such as skinny bundles and TV Everywhere, which enables content to be integrated and shared across platforms, pay TV providers are showing that the battle for subscribers is still very much alive,” the report reads.