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Sep 13, 2017

TV advertising projections reduced due to increased cord-cutting

Sara Fischer

eMarketer has reduced its estimate for TV advertising spending in the U.S. this year by nearly $1 billion due to an uptick in cord-cutting, or people ditching their expensive cable bundles for cheaper streaming options.

Why it matters: The trend reflects consumers switching from bundled cable packages to more affordable, niche bundled services that can be accessed on TV box tops or on mobile. YouTube TV and Hulu TV launched within the past year, joining the likes of Dish's SlingTV, Sony's Playstation Vue and AT&T's DirectTV Now, all at a roughly $40 monthly price point — a bargain considering the average American pays $92 monthly for cable.

Data: eMarketer; Notes: Pay TV viewers have access to traditional TV service, excluding streaming. Non-pay viewers either quit their service or never had access. Chart: Andrew Witherspoon / Axios
Data: eMarketer; Notes: Pay TV viewers have access to traditional TV service, excluding streaming. Non-pay viewers either quit their service or never had access. Chart: Andrew Witherspoon / Axios

The group predicts that by 2021, the ratio of Pay TV viewers to non-Pay TV viewers will drop from 4:1 to nearly 2:1.

It also expects TV advertising spending to increase only by .2% this year, around half of its previous annual growth rates in non-election, non-Olympics years. As a result, it estimates that TV's share of total media ad spending in the US will drop from 36.6% to 34.9%, and is expected to fall below 30% by 2021, as mobile advertising becomes the dominant advertising medium in the U.S.

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