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Here comes the next wave of cord-cutting

A little more than four years ago, I wrote my first of many weekly columns about cord-cutting for TechHive, proclaiming that this was the start of a golden age.

Things were different back then. Netflix and Amazon Prime were just getting big enough to become a real threat to cable companies and TV networks. Traditional TV subscriptions were still growing, but at a slower rate than in previous years. Networks like HBO and CBS were starting to think about their own streaming services, but Sling TV, the first bundle of live TV streaming channels, wouldn’t launch until the following year.

Now, you can choose from a half-dozen live TV streaming services offering a cable-like experience for a fraction of the cost. You can also enjoy an overwhelming amount of original programming on subscription services such as Netflix, and you can tap into free services such as The Roku Channel and Pluto TV for even more movies and shows. Over-the-air DVR has also become more sophisticated, so it’s cheaper and easier than ever to record free broadcast channels from an antenna.

But despite everything that’s happened over the last four years, the biggest changes are yet to come. We’re now headed for a second wave of cord-cutting, driven largely by a new generation of viewers who will be less likely to tolerate television in traditional form. For both consumers and the TV industry, the ones most willing to accept these changes will benefit the most.

Cord-cutting grows up

In a column from 2016, I referred to live TV bundles such as Sling TV and PlayStation Vue as an awkward adolescent phase for online video. Like myopic teenagers, these services claim to be new and exciting, when they’re really just rehashing a limited set of well-trodden ideas such as DVR, grid-based channel guides, and live linear programming. While these services tend to be cheaper than cable—mainly because of more competition pressuring everyone to keep prices down—they’re not very flexible in terms of pricing, and they introduce new pain points such as ad-skipping limitations and reliability issues.

directvnow4Jared Newman / TechHive

Live TV streaming services like DirecTV Now hold fast to old concepts like the grid guide.

Netflix is showing people a better way: Unless a program is actually happening live, it should be available on demand, preferably without ads. Now, survey after survey has shown that this approach is eating into the time that viewers—and younger viewers, especially—spend with traditional cable channels:

  • A recent Piper Jaffray survey found that Netflix and YouTube combine for 70.7 percent of teens’ video viewing, while cable has fallen to 16.4 percent.
  • 41 percent of consumers aged 22 to 37 spend more time watching streaming services than cable or satellite TV, according to a recent survey by Morning Consult and The Hollywood Reporter.
  • The average person’s pay-TV viewing has fallen by 27 hours per month from 2010 to 2018, Redef’s Matthew Ball reported based on Nielsen data. The only age groups whose pay-TV time went up are those aged 50 and over.
  • Another survey from this year by Cowen & Co. found that 27 percent of people choose Netflix most often for watching TV, versus 20 percent for basic cable and 17 percent for broadcast TV. Among 18- to 34-year-olds, Netflix’s share rose to 40 percent, with YouTube in second place at 17 percent.
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Essentially, Netflix and YouTube are becoming synonymous with television for a growing number of people, and that’s making traditional media companies nervous. While some TV executives claim that live TV streaming bundles have shielded them from cord-cutting, the truth is those bundles only provide short-term relief as viewing habits change.

This is why TV networks are now investing in their own Netflix-like services:

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