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Our Consumer Insights surveys have found that, as a percentage of total internet households, U.S. video cord cutting (11%) is comparable to major countries in Europe and Asia. But the profiles of these video cord cutters could not be more different.
We tend to think of households dropping multichannel TV service as a uniquely American phenomenon. However, across the eight study countries, video cord cutting (as a percentage of internet HHs) is remarkably consistent, ranging from 7% in France to 15% in China. What differentiates countries is their overall pay TV penetration rate. Europe has a much higher percentage of households that have never had a multichannel TV service subscription than the U.S. or Asia. Poland stands out as the lone European market with a U.S.-level pay TV penetration rate (only 16% are non-subscribers) and low level of video cord never households (8%). We define a non-multichannel household as one that does not subscribe to a multichannel TV service.
Note that S&P Global Market Intelligence estimates that multichannel TV subscriptions in South Korea are 150% of total households. This is based on South Korea's reporting of multiple service subscriptions (e.g. analog cable and digital cable) per household.
How video-cord-cutter households receive TV entertainment also illustrates regional differences. For example, the survey data shows that relatively few video-cord-cutter households in China or South Korea rely on over-the-air broadcast TV. Half of video-cord-cutter households in China and more than two-thirds in South Korea receive TV entertainment via online video services. In contrast, the vast majority of video-cord-cutter households in European countries we surveyed rely on free OTA broadcast TV, supplemented increasingly by online video content. Our U.S. survey indicates a fairly even split of video-cord-cutter households using OTA broadcast TV (54%) and online video services (42%).
The survey data also shows that video cord cutters in China and South Korea are more likely to be young adults than in Europe or the U.S. For instance, over three-quarters (76%) of video cord cutters in China and 57% in South Korea are adults under 35 years of age. European video cord cutters tend to be older adults. Over half (51%) of video cord cutters in the U.K., along with 48% in Germany and 47% in France are adults 45 years or older. The U.S. survey data reveals that video cord cutting is distributed fairly evenly among adults ages 25-54.
We asked video-cord-cutter adults the primary reason for dropping their multichannel TV service subscription. Video cord cutters across the European study countries indicated either that they were satisfied viewing free OTA broadcast TV or that the cost of pay TV service is too high.
In the U.S., the cost of a multichannel TV service subscription is also the dominant reason for cutting the video cord. Neither OTA broadcast TV, nor online video services alone serve as full replacements for a multichannel TV service. But approximately one-quarter (27%) of U.S. video cord cutters indicated they are satisfied with either OTT video only or a combination of OTT/OTA TV programming.
Our Asia surveys found that the forces driving video cord cutting in China and South Korea are not alike. For example, over one-third (34%) of video cord cutters in China indicated they are satisfied with online TV content. Somewhat surprisingly, in South Korea — a country with huge internet bandwidth — online video is not a dominant factor in video cord cutting. Instead, the cost of pay TV service is the most cited reason for dropping the subscription.
In summary, our surveys found:
- Video cord cutting is not a U.S.-centric trend, but is happening worldwide.
- China has the highest percentage of video cord cutters, who are young adults preferring online video.
- Video cord cutters in South Korea have a similar profile to China except that cost is the driving trend.
- In Europe, video cord cutters tend to be older adults who take advantage of free OTA broadcast TV to lower expenses.
- U.S. video cord cutting (as a percentage of internet HHs) is in line with other major countries. Video cord cutters come in all ages and are driven by the high cost of multichannel TV service. Both OTA and OTT video are used as replacement.
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Data presented in this article was collected from multiple Consumer Insights surveys conducted during 2015 and 2016. S&P Global Market Intelligence conducted two U.S. surveys in February 2016 totaling a combined 21,534 U.S. internet adults. The results from these surveys have a margin of error of +/-0.67 ppts at the 95% confidence level. Our survey of Poland, completed in September 2015, totaled 1,000 internet adults. We also conducted Western European surveys in the U.K., France, Germany, and Italy during Q4 2015, each of approximately 1,000 internet adults. Our surveys of China and South Korea, completed in June 2016, each totaled 1,000 internet adults. The results from these international surveys have a margin of error of +/-3 ppts at the 95% confidence level.