Roku Analyzes Why U.S. Households are Leaving Traditional TV for Streaming

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The takeaways

  • Roku, Inc. reports that 30% of U.S. households stopped their pay TV subscriptions because of cancelled sports games.
  • Consumers are also cord cutting due to more attractive free content and trial offers from streaming services.
  • Sports games are being rescheduled, but questions remain over the return of football – worth billions of dollars to networks and advertisers.

What happened?

Roku, Inc.’s latest annual cord cutting study found that approximately 32% of U.S. TV households do not subscribe to traditional pay TV (cable, satellite, telco), while another 25% of “cord shaver” households cut their services back. A further 45% plan to cut the cord fully in the next six months. In total, 9 million customers opted out of traditional pay-TV bundles from 2018 – 2019. Roku users said that cord cutting saved them approximately $75 per month.

Crucially, 30% of households cited the lack of live sports as the reason for canceling their pay TV subscriptions. Only 17% indicated re-subscribing this year when live sports return, while 51% will watch live sports by other means. 52% of traditional and cord shaving households may reduce their pay TV package if televised live sports do not return.

Football and advertisers

Worries surround football plans as sports programming returns with a pandemic-caused, truncated season. Per the Washington Post, advertising measurement firm iSpot illustrates the NFL’s value in terms of ad dollars. Last season, CBS generated approximately $1.5 billion in NFL advertising – 25% of their total advertising in 2019 (not including the Super Bowl). NBC generated roughly $1.5bn, over 20% of their 2019 ad revenues. At almost 40% with around $2bn, Fox was the most reliant on NFL coverage for ad revenues.

Additionally, ESPN pays roughly $2 billion for “Monday Night Football,” Fox pays over $1.5 billion for two annual NFL packages, CBS pays roughly $1 billion for its Sunday package, and NBC pays $950 million for “Sunday Night Football.” Though the 2020 season is still scheduled for September, players have publicly brought up health and safety concerns amidst coronavirus fears. Even a small number of cancelations will mean huge ad revenue losses for networks and reduced inventories for advertisers.

Baseball returns this Thursday on ESPN, whilst the NBA resumes on July 30 and NHL playoffs begin on August 1.


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