Cord Cutting Seems Disastrous for TV Advertising
Typically, the disruption of entrenched technologies follows a pattern: slowly, then all at once. In our view, linear TV has hit the ‘all at once’ tipping point. Since peaking in 2011 at 103 million, the number of linear TV households in the US has
slipped by 2.1% on average per year, a decline that probably accelerated this year in the absence of live sports. Recently, television advertisers have been disappointed by the dearth of viewers as Major League Baseball (MLB) and the National Basketball Association (NBA) returned to the airwaves. According to Roku’s annual cord-cutting
survey, only 17% of recent cord cutters plan to re-subscribe to linear TV when live sports resume in force. Indeed, according to our research, during the next five years the number of US linear TV households will drop approximately 48%, from 86 million today to roughly 44 million in 2025.
If users cut the cord at the rate we anticipate, the $70 billion-dollar US TV ad market could collapse, shifting dollars to more efficient digital platforms. This week,
Roku and
The Trade Desk reported strong growth in their connected TV ad businesses, while most linear TV players like ViacomCBS posted
double-digit declines. In other words, linear TV advertising seems to have hit the tipping point, with no return.
Could this be the end of ridiculous pro salaries?