The notion has been around for a few years now that folks were or will soon be “cutting the cord” and cancelling cable TV in favor of internet streaming services, but until now the fear has been largely unproven. A new study published by Moffett Research shows that year-over-year subscriber growth is declining.
“Cord cutting used to be a myth. It isn’t anymore,” Moffett writes in a new note. “No, the numbers aren’t huge. But they’re statistically significant.”
The trend seems to be growing, fueled in part by new household creation that simply never subscribes to cable in the first place. These folks, succinctly referred to as “cord nevers,” are relying largely on streaming services like Netflix Inc. (NASDAQ:NFLX), Amazon.com Inc. (NASDAQ:AMZN) Prime, Hulu, and even YouTube. Combine these robust alternatives with the pure economics of the decision, and you can see why the trend is heading in the direction it is.
TV bills have increased six percent a year, and are expected to continue increasing as the cost of content for cable companies accelerates. People with less disposable income can’t keep up. In addition, for just $7.99 for a Netflix account and some (free!) shared HBO Go passwords, you can keep yourself occupied for a tenth of the price.