Television has long been a staple in households around the world, providing entertainment, news, and information. However, the landscape of television is undergoing a dramatic shift as traditional TV usage continues to decline while the prices of streaming services rise. This article delves into the reasons behind this decline, the rise of streaming services, and the challenges faced by both traditional TV providers and streaming platforms.
The Decline of Traditional TV
Nielsen’s monthly streaming report, The Gauge, reveals that total traditional TV usage, which includes broadcast and pay-TV, dropped below 50% in July for the first time ever. Pay-TV customers’ usage fell to 29.6% of TV, while broadcast’s share dropped to 20%. In contrast, streaming accounted for nearly 39% of usage in July, marking the largest share reported since Nielsen began reporting monthly numbers in June 2021.
The rise of streaming services, such as Netflix, Disney+, Hulu, and Warner Bros. Discovery’s Max, has contributed to the decline of traditional TV. Consumers are increasingly cutting ties with traditional bundles and opting for streaming alternatives. This trend has only accelerated since the beginning of the Covid pandemic, when streaming usage surged.
Despite the growth of streaming, larger platforms like Netflix and Disney+ have experienced a slowdown in subscriber growth. Fledgling apps like Paramount+ and Peacock have seen more member growth but have smaller subscriber bases. As a result, streaming companies are shifting their focus from subscriber growth to profitability in the segment, as the traditional TV business continues to deteriorate.
The Challenges Faced by Traditional TV Providers
Traditional TV providers, such as Comcast Corp. and Charter Communications, are grappling with quarterly drops in customers. During the second quarter, Comcast and Charter lost 543,000 and 200,000 pay-TV subscribers, respectively. The overall number of pay-TV households has steadily declined, with 41 million pay-TV households in the second quarter, down from 45 million and 50 million in the same periods in 2022 and 2021, respectively.
Macquarie’s report reveals a weighted average 9.6% decline in pay-TV subscribers year-over-year, amounting to approximately 4.4 million households. The report also indicates that pricing does not drive upside for pay-TV providers, highlighting the urgent need for the industry to adapt to the changing preferences of consumers.
The Evolving Strategies of Streaming Platforms
To boost revenue and profitability, streaming platforms are raising prices across the board. Even Disney, known for its ad-free Disney+ and Hulu subscriptions, has joined the trend. This shift away from affordable pricing is an attempt to offset the high costs of content production and acquisition.
Additionally, advertising is playing a more significant role in driving revenue for streaming services. Companies are also exploring ways to tackle password sharing, a common practice that affects their bottom line. Cost-cutting strategies, such as reducing investment in original programming, have become essential for streaming platforms to remain competitive.
As streaming platforms cut back on original programming, licensed content, particularly from traditional outlets, continues to attract viewers. This phenomenon is evident in the success of shows like “Suits,” which originally aired on NBCUniversal’s cable channel USA Network and is now available on Netflix and Peacock. In July, “Suits” accounted for 18 billion viewing minutes on both platforms, driving a 4.2% increase in Netflix viewership.
Netflix remains the dominant streaming platform, comprising 8.5% of total TV usage. Behind Netflix, other major players include Hulu, Amazon’s Prime Video, and Disney+, which benefits from licensed programs like the popular kids cartoon, “Bluey.”
The Future of Television
The decline of traditional TV and the rise of streaming services indicate a significant shift in consumers’ viewing habits. While streaming services offer convenience, an extensive content library, and personalized recommendations, the increasing costs may deter some viewers. The industry will need to strike a balance between providing valuable content and maintaining affordable pricing to retain and attract subscribers.
As streaming platforms continue to evolve, the landscape of television will undoubtedly undergo further transformation. Both traditional TV providers and streaming services must adapt to rapidly changing consumer preferences and find innovative ways to thrive in an increasingly competitive market. Only time will tell how this ongoing shift will shape the future of television.
The decline of traditional TV and the rise of streaming services have disrupted the television industry. With total traditional TV usage dropping below 50% for the first time, streaming has taken center stage. Traditional TV providers face challenges as subscribers continue to cut the cord, and pricing fails to drive upside. Streaming platforms, on the other hand, are grappling with slower subscriber growth but are focused on profitability. The future of television lies in striking a balance between engaging content, affordable pricing, and innovative strategies that capture viewers’ attention. The transformation of television is still unfolding, and the industry must adapt and evolve to thrive in this new era.