Cable Bills Climb, But Most Still Sticking With Pay TV

You'd think this would be the logical scenario: Cable bills go up, fed up subscribers cut the cord en masse.

But that's not what's actually happening, at least in a major way.

In a survey by Leichtman Research Group, about 82 percent of TV households nationwide still subscribe to some form of pay-TV service. And though that's down from 87 percent in 2011, it's the same as in 2005, when the same 82 percent of households had a pay-TV service.

However, alternatives to pay TV were much more limited a decade ago; Netflix, for example, didn't launch its streaming service until 2007, and Hulu debuted a year later.

The reluctance by consumers is also surprising because they can save a lot of money by severing pay-TV ties. Another recent survey by consulting firm cg42 found that those with a pay-TV bundle—which includes TV, internet access, and phone service—spend about $187 per month on average, and those who cut their pay-TV service spend about $83 monthly.

Cord-nevers—those who never had a pay-TV service—spend even less, about $71 per month.

The number of people holding on to pay TV in the Leichtman study is similar to what Consumer Reports found when it surveyed its own subscribers. In a separate national survey we published earlier this year, about 68 percent of U.S. households still had a pay-TV service.

Bruce Leichtman, president and principal analyst at the eponymous company, says the decline in penetration is also due to "a lack of those who are coming into the category, and the industry not keeping pace with movers and related rental housing growth.”

Leichtman also notes that the average monthly spending on pay-TV service rose 4 percent, to $103.10. Though it's a hike we imagine few are happy to pay, it's the lowest annual increase in five years, the study found.

Cord-Cutting Might Be an Inaccurate Term

In an interview with Consumer Reports, Leichtman called "cord-cutting" an inaccurate term, saying that consumers have always gone in and out of the category.

According to Leichtman Research’s phone survey of 1,206 adults, 6 percent of pay-TV subscribers say they're likely to disconnect from their provider and not subscribe to any TV service in the next six months. That's not much different from the 7 percent who said that in both 2015 and 2014.

The survey notes that of the TV households that don't currently subscribe to a pay-TV service, 14 percent did pay for a service within the past year but dropped it. But overall, only about 2.6% of TV households paid to subscribe to a traditional pay-TV service in the past year and currently do not. Again, that's not radically different from last year, and it's similar to what we saw a decade ago.

“The flow in and out [of pay-TV services] is largely the same today as it was a decade ago—it's centered around expense and lack of use," Leichtman explains. "A difference today, however, is that consumers have more choice of alternatives via the internet and from over-the-air if they decide not to get a pay-TV service."

The survey also found that about 1 percent of pay-TV subscribers were new to the category in the past year, about the same as last year and 2011 but down from the 3.5 percent growth we saw in 2006.

TV Subscribers Also Stream

Another point that Leichtman made to Consumer Reports during the interview was related to the growing availability of both pay TV and online video service choices. "Most consumers don’t see these as either/or offerings," he says, noting that of 80-plus percent of households that do get a pay-TV service, more than half also get an online subscription video on-demand service such as Netflix. By comparison, only 11 percent get an online video subscription service but no pay-TV service. Consumer Reports' own surveys show that about half of all U.S. households use some type of streaming video service.

The survey also said that about 12 percent of pay-TV subscribers are likely to switch providers in the next six months, which is similar to what has happened over the past two years.

In the survey done by cg42, 83 percent of those who've cut the cord say they can get “most or all” of the content they want to watch without a pay-TV subscription. And that number is a few percentage points higher for those who have never received pay-TV service.

Another interesting finding of the cg42 survey is that cord-cutters were twice as likely to go back to their pay-TV service within the first month of severing their ties. After that one-month withdrawal period, they seemed more content with the alternatives they chose. If you're considering cutting the cord, cutting back on your TV package, or just looking for more TV-viewing options, read our article "How to Win at TV," which can help you sift through all of the choices.



More from Consumer Reports:
Top pick tires for 2016
Best used cars for $25,000 and less
7 best mattresses for couples

Consumer Reports has no relationship with any advertisers on this website. Copyright © 2006-2016 Consumers Union of U.S.

Advertisement