Increased cord-cutting doesn’t mean the end of TV

Despite the pandemic accelerating a drop in pay TV penetration, reach remains strong and presents an opportunity for new strategies.

In the 2021 edition of eMarketer’s “Time Spent With Media” report, it’s forecast that cable cord-cutting trends won’t slow down in Canada, with only 51.3% of households expected to have pay TV by the end of 2021, dropping further to 48.9% in 2022 and 46.7% in 2023.

Cobi Zhang, director of media investment and activation at Horizon Media, says the cord-cutting trend is not new in Canada or globally. But despite a drop of nearly 25% in the number of homes with pay TV over the last six years, he points out marketers should also be looking at another statistic that shows the medium still has significant relevance.

“During this same time frame, weekly reach did not decrease as drastically,” he points out. “In English Canada, it went from 96.4% in 2015 to 84.7% in the most recent week reported. The gap is even smaller in French Canada, which only decreased by 7% from 2015 to present. No doubt, TV is still a powerful mass reach medium.”

Although this trend may not be reversible, Zhang says there are opportunities for the industry to adapt. At Horizon specifically, the agency has been monitoring these changes and presented them as opportunities to test and measure.

“For example, major broadcasters in Canada all have their linear TV inventory available on advanced selling platforms, such as SAM and Cynch, and these platforms continue to improve. Targeted solutions with the scale as big as linear TV, offering transparency in the algorithms, and the potential for attribution will certainly attract ad dollars.”

The report says streaming services are picking up the slack for cord-cutters, with Netflix being the most popular service for both English and Francophone Canadians (68.3% and 52.7%, respectively), followed by Prime Video (34.2% and 17.9%). Looking ahead, eMarketer projects pay TV households to continue to decline in Canada so that by 2025, just 43.1% of Canadian households will have pay TV subscriptions.

Leanne Burnett-Wood, VP of investment for Magna, is not surprised by these forecasts. She says cord-cutting has been a concern for years, and the pandemic only sped up its pace. The adoption of streaming accelerated not just because people had more time to consume more content, but also the time to review household budgets and consider where they could save.

For media companies, increasing the price of their TV ads seems like a tempting solution to compensate for the loss of eyeballs. But Burnett-Wood points out that, in the long-term, it would be better to think more holistically about the options they offer buyers and advertisers.

“That audience viewership continues to decline in traditional television is not new news,” she says. “And the idea of significantly increasing rates to indirectly offset the audience declines is a very short-sighted approach. Eventually, broadcasters will be forced to offer different and affordable buying solutions otherwise, unfortunately, they will be in jeopardy of losing total television budgets to digital.”