Cord-cutting, the phenomenon of consumers abandoning traditional cable and satellite television in favor of streaming services, has profoundly transformed the media landscape. This shift is primarily driven by the rising cost of cable TV subscriptions (averaging $217.42 per month) and the massive content libraries and convenience offered by streaming services.
Here's how cord-cutting has changed media, in the larger context of key metrics:
1. Decline of Traditional TV and Rise of Streaming Dominance
- Massive Subscriber Losses: Since 2014, U.S. cable and satellite TV providers have lost over 20 million subscribers. Major providers like Comcast and DirecTV have seen millions of subscribers depart. Cord-cutting households surpassed pay TV households for the first time in 2023, and by 2026, an estimated 80 million U.S. households will be cord-cutting.
- Emergence of "Cord-Nevers": A new demographic, "cord-nevers," has emerged, consisting of adults who have only ever used streaming services for entertainment. This indicates a fundamental shift in media consumption habits from the outset for younger generations.
- Decline in Linear TV Watch Time: In countries like Canada, more than 50% of linear TV watch time has disappeared among individuals under 55 in the last decade. Traditional TV maintains leadership but is increasingly challenged by on-demand streaming.
- Streaming as the New Standard: Streaming video-on-demand (SVOD) subscriptions are projected to reach 1.68 billion globally by 2027. In the U.S. alone, there are 354 million streaming subscriptions, with 86% of households with a TV expected to have a streaming subscription by 2027, averaging 4.37 subscriptions per household. Netflix (49%) and Amazon Prime (43%) are the most popular paid services in the U.S..
2. Evolution of Content Strategy and Key Metrics
- Shift in Core Metrics: For streaming giants like Netflix, the primary metrics of success have become "hours watched" and "retention". "Hours watched" is considered a "leading indicator for retention". The goal is to maximize the time users spend watching.
- Content Design for Engagement: This focus on hours watched and retention influences content design, leading to:
- Longer Series: Shows are sometimes designed with 10+ episodes "for no reason other than to extend hours viewed".
- Binge-Watching Promotion: Features like auto-playing the next episode are implemented to encourage continuous viewing. This design choice, along with auto-playing previews, is often seen as "anti-consumer" by users, who find it manipulative. While users can often turn off auto-play, the setting is sometimes made difficult to access, for example, only via the website and not in app clients.
- Beyond Hours Watched – Completion Rates and Value: While hours watched are crucial, other metrics are vital for content renewal decisions. These include:
- Completion Rate: This metric, indicating how many viewers watch a show all the way through, is a factor for renewal, as seen with shows like "Sandman".
- Abandonment Rates: Services track how many people start a show but abandon it, sometimes "down to the minute".
- Viewer Value: Streaming services analyze who is watching (e.g., "more valuable customers" vs. less valuable ones).
- Timeliness of Viewing: When content is watched (e.g., within the first week of release) can also impact its perceived success.
- Cost vs. Performance: A show's economic viability is paramount. An inexpensive, even if poorly performing, show might be renewed if it attracts valuable customers, while a high-performing but costly show might be axed if it doesn't meet very "high bar" financial or viewership thresholds.
- New Subscriber Acquisition: For new shows, attracting new subscribers is a key metric.
- Moral Dilemmas: The intense focus on maximizing viewing time has led to "moral dilemma[s]" for some employees, questioning if encouraging excessive consumption is "good for humanity".
3. Changes in Advertising and Monetization Models
- Shift in Advertising Spend: Marketers are increasingly shifting from traditional and cable TV to over-the-top (OTT) platforms. 89% of marketers believe advertising on streaming platforms is equally or more effective than traditional TV advertising. Streaming is now viewed as the "top channel for brand storytelling" by 43% of marketers, surpassing social media (29%) and traditional TV (26%).
- Higher ROI for Streaming Ads: Studies have shown that campaigns with more than 50% spending on YouTube drove the highest combined ROI, and brand health metrics were significantly higher for YouTube compared to Linear TV.
- Rise of Ad-Supported Tiers: Ad-supported streaming services are growing faster than subscription-based ones (29% growth between 2020 and 2022, compared to 22% for subscription services). Many services now offer a cheaper "with ads" package or have introduced ads as a new revenue stream, despite initially being ad-free. This marks a departure from one of streaming's initial advantages over cable TV.
- Password Sharing Crackdown: To boost revenue and subscriber counts, streaming services have cracked down on password sharing, a practice they once tacitly condoned. This has frustrated many viewers.
4. Fragmented and Inconsistent Viewership Measurement
- Inadequacy of Traditional Methods: Traditional television audience measurement (TAM) systems, like Nielsen's, are proving inadequate for the complex and fragmented modern viewing landscape. Nielsen's accreditation was even revoked in 2021 due to issues with data quality.
- Lack of Standardization: There is a significant lack of consistent metrics across different streaming services. For example, Netflix reports "hours viewed" and "views," while Amazon Prime Video focuses on "viewers". This makes cross-platform comparisons difficult for advertisers and media executives, leading to conflicting interpretations of a show's success.
- Rise of "Big Data" Approaches: New measurement firms are emerging, utilizing "big data" from set-top boxes, smart TVs, and other sources to gain a more complete view of viewing habits. However, the industry still "desperately needs a single, trusted standard" for measuring viewership.
- Limited Transparency: Streaming services are often criticized for their lack of transparency regarding concrete viewership data, especially with showrunners. This leads to frustration and reliance on "broad assumptions" by executives.
- Challenges in Multi-Device and Time-Shifted Viewing: Measuring consumption on devices other than traditional TV (computers, tablets, smartphones) and time-shifted viewing (watching content days or weeks after broadcast) remains inconsistent across countries and measurement companies.
5. Altered Consumer Behavior and Attention Spans
- On-Demand and Binge-Watching: Streaming popularized the ability for viewers to consume content "at their viewing pleasure" and "at will," giving rise to the "binge movement" where entire shows can be finished within days.
- Multi-Device Consumption: While television remains the primary medium for media consumption (43% of time), phones are rapidly gaining ground (22.5%) and are the dominant device for Gen Z (31.6%).
- Double-Screening: A significant shift is the prevalence of "double-screening," with 57% of respondents being on their phone while watching TV. Gen Z is overwhelmingly more likely to do this (78%) and checks their phone an average of 6 times during a program. This distraction often leads to rewinding a movie or TV show (average 3.8 times).
- Fragmented Attention Spans: The average American attention span is reported as 44.4 minutes. However, this varies by content type: movies hold attention for 15.7 minutes, TV shows for 14.6 minutes, but short-form social media content only for about 26.1 seconds. Younger generations, particularly Gen Z, have shorter overall attention spans but longer ones for short-form content.
- Guilt and Mental Health Impact: Excessive content consumption leads to feelings of "losing" time (an average of 3 days per month, 36 days per year) and guilt (3.1 times per month). There's a correlation between increased phone usage/content consumption and poorer self-reported mental health. Younger generations are more likely to acknowledge consuming "too much media".
- "Bed Scrolling": A common habit is scrolling through phones before going to sleep (55%) and before getting out of bed (43%), with Gen Z being the most prone to this behavior.
In essence, cord-cutting has shifted media from a scheduled, linear, and often ad-heavy model to a personalized, on-demand, and highly fragmented ecosystem. This has revolutionized how content is created, distributed, measured, and consumed, ushering in an era of complex data analysis and evolving consumer habits.