For the First Time Ever, Traditional TV Usage Plummets Below 50%

The decline of traditional TV continues, even as the prices of streaming services rise.

In July, total traditional TV usage (including broadcast and pay-TV) dropped below 50% for the first time ever, according to Nielsen’s monthly streaming report, The Gauge.

Pay-TV usage fell to 29.6%, while broadcast dropped to 20% during the month. Streaming accounted for nearly 39% of usage in July, the highest share reported since Nielsen began reporting monthly numbers in The Gauge report in June 2021.

Streaming has been on the rise as consumers opt for cutting traditional TV bundles. This trend has accelerated since the beginning of the Covid pandemic, which brought a surge in streaming usage.

Major pay-TV providers like Comcast Corp. and Charter Communications have reported quarterly drops in customers. In the second quarter, Comcast and Charter lost 543,000 and 200,000 pay-TV subscribers respectively.

“We think the metrics for linear TV are all bad,” stated Tim Nollen, a Macquarie senior media tech analyst, in a recent report.

According to Macquarie’s report, pay-TV operators experienced a weighted average decline of 9.6% in subscribers year-over-year, amounting to approximately 4.4 million households. The report also mentioned that pricing does not drive upside for pay-TV.

The overall number of pay-TV households has steadily declined. Macquarie reported 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.

The rise of streaming services, including Netflix, Disney’s Disney+, Hulu and ESPN+, and Warner Bros. Discovery’s Max, has had an impact on the decline of pay-TV. However, these operators are now focusing on gaining market share and profitability from streaming while their pay-TV channels decline.

Although viewers are increasingly turning to streaming, subscriber growth for platforms like Netflix and Disney+ has slowed down. On the other hand, emerging apps like Paramount+’s Paramount and Comcast’s Peacock have seen more member growth, albeit with smaller subscriber bases.

Streaming companies have shifted their focus from subscriber growth to profitability as the traditional TV business shrinks.

Price increases for streaming services, including ad-free subscriptions for Disney+ and Hulu, have been implemented to boost revenue, but lackluster subscriber growth has hindered their profitability efforts, as noted in Macquarie’s report.

Advertising plays a significant role in driving streaming revenue, and companies are cracking down on password sharing. Reducing content expenses, especially for original programming, has also been a major cost-cutting strategy.

The shift away from originals is happening as licensed programming, especially from traditional outlets, tends to attract a large audience.

For Netflix, the series “Suits” has been a recent hit. Originally aired on NBCUniversal’s cable channel USA Network, the show was previously only available for streaming on Peacock. The series has contributed significantly to streaming viewership on both Netflix and Peacock, accounting for 18 billion viewing minutes in July, according to Nielsen.

Netflix’s viewership rose by 4.2% during the month, making up 8.5% of total TV usage. Behind Netflix, Hulu, Amazon’s Prime Video, and Disney+ followed, with Disney+ likely benefiting from the licensed kids cartoon “Bluey.”