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REPORT: People are ditching cable at a faster clip than previously thought

Business Insider logo Business Insider 9/13/2017 Tanya Dua

Screen Shot 2017 09 12 at 5.56.36 PM © Provided by Business Insider Screen Shot 2017 09 12 at 5.56.36 PM

  • People are abandoning cable TV faster than previously thought, and that's causing TV ad spending to also go down.
  • According to eMarketer's latest figures, TV ad spending in 2017 will expand to $71.65 billion, down from the $72.72 billion predicted earlier.
  • People are also spending less time in front of the TV, with the average time among US adults dropping to to 3 hours 58 minutes this year, the first time it has dropped below 4 hours a day.

TV ad spending will be lower than anticipated this year according to eMarketer, because people are cord-cutting at a faster clip than previously expected.

According to the market research company, TV ad spending in 2017 will expand just 0.5% to $71.65 billion, down from the $72.72 billion predicted in its Q1 forecast for 2017. Further, TV’s share of total media ad spending in the US will drop to 34.9%, and is expected to fall below 30% by 2021.

"eMarketer expected a slowdown this year in TV ad sales, after 2016 benefited from both the Olympics and US presidential election,” said Monica Peart, eMarketer’s senior forecasting director. “However, traditional TV advertising is slowing even more than expected, as viewers switch their time and attention to the growing list of live streaming and over-the-top [OTT] platforms."

Cord-cutters, or consumers who are opting for getting their TV via the internet rather than traditional pay TV services, are a major factor behind TV ad spending declining. The phenomenon is gaining momentum due to several factors. Traditional pay TV operators like Dish Network are developing their own streaming platforms such as Sling TV, networks such as HBO and ESPN are launching or planning their own standalone digital subscription services, and digital players like Hulu and YouTube are delivering live TV channels over the web at lower prices.

In fact, cord-cutting has become so prevalent that even telecommunication companies like AT&T and T-Mobile have jumped in on the action in recent weeks, offering customers bundle deals with access to streaming services like Netflix and HBO. 

Screen Shot 2017 09 12 at 5.57.54 PM © Provided by Business Insider Screen Shot 2017 09 12 at 5.57.54 PM

EMarketer has also increased its estimates for the growth in cord-cutters substantially for 2017 through 2021, saying that by by 2021, the number of cord-cutters will nearly equal the number of people who have never had pay TV, or "cord-nevers."

The company forecasts that there will be 22.2 million cord-cutters over the age of 18 this year, more than the 15.4 million that the company had previously predicted. This figure is up 33.2% over 2016. Meanwhile, the number of US adult cord-nevers will grow 5.8% this year to 34.4 million.

"Younger audiences continue to switch to either exclusively watching OTT video or watching them in combination with free TV options," said Chris Bendtsen, senior forecasting analyst at eMarketer. "Last year, even the Olympics and presidential elections could not prevent younger audiences from abandoning pay TV."

While 196.3 million US adults will still watch pay TV, including cable, satellite or telco this year in the US, that number will be down 2.4% over 2016, eMarketer predicts. By 2021, that total will have fallen nearly 10% compared to five years earlier. 

Overall, US adults are spending less time in front of the TV as well. The average time spent watching TV among US adults this year will drop 3.1% to 3 hours 58 minutes this year, according to eMarketer, the first time it has dropped below 4 hours a day.

In contrast, digital video consumption continues to rise. US adults will consume 1 hour 17 minutes of digital video this year, up 9.3% over 2016. 

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