Video: What Are the Current Trends in Video Cord Cutting?
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Michelle Abraham: While the trend in the first and second quarter of 2018 had showed some slowing in that movement as Warren mentioned in his presentation this morning, there were over a million households who cut the cord in the third quarter of 2018. The challenge for the pay TV operators and the TV networks is, of course, how do they change, how do they adapt to that. Certainly, virtual multichannel services or the programmer's own direct-to-consumer services are one of the ways that they're adapting to that.
When we look at who's cutting the cord, it's no surprise that the younger generation, the what is referred to as Generation Z and then the Millennials are the generation above them, are some of the primary cord cutters. Because I'm going to use those terms several times through the presentation, I wanted to define those. Generation Z in 2018 are between 18 and 21 years old and younger, but we survey those who are 18 and older. For our purposes, they're 18 to 21. The Millennials are actually 22 to 38. Then Gen X in 2000 ... some of the status from 2017, so you'll see the 38 to 51, but in 2018, the Gen X generation is 39 to 51. Or, I'm sorry, 52. Then the boomers are 53 to 72. The senior generation is 73 and older.
It's certainly not just the Millennials who've cut the cord. In fact, between 2016 and 2017, you see some of the highest growth in the generation cutting the cord has actually been the Gen X generation. It's not just people cutting for reasons of cost. Cost is certainly a significant part, again, as Warren mentioned this morning, but it's not just lower income households who've cut the cord, if they ever had a cord to begin with. It's also higher income households. We had a show of hands earlier. Some of us have certainly cut the cord. Here, the chart shows education levels. It's not just those with lower education levels. It's certainly those with higher education, those who are four-year degrees were the group that grew the most between 2016 and 2017.
Outside the US, cord cutting has not been as big of a trend. Some reasons, that's because pay-TV penetration wasn't as high in some countries as it had traditionally been in the United States. You can see in the chart and that shows the UK, Germany, France, and South Korea, each year, there hasn't been too much variation in households that respond that they subscribe to a pay-TV service. In Europe, we have seen some of the shift has actually been from, say, satellite services to IPTV services or that are offered by the telcos who often bundle a video service which may be a streamed service with broadband and voice services, just as we have in the United States. There, sometimes it's a lot less expensive, the bundle. It pretty much makes the video ... you're getting video almost free. You also have in Europe, in some of the countries, where you're video subscription is part of your rent. That also holds back cord cutting in some of those areas.
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