Tipping point: Video streamers are now in the majority as pay TV watching drops

Mike Snider | USA TODAY

Show Caption Hide Caption Visit Netflix's Hollywood facility A visit to see Netflix's Hollywood facility, by Jefferson Graham for #TalkingTech.

Streaming video has reached a tipping point. And that's bad news for pay TV.

More than half (55%) of U.S. households now subscribe to at least one video streaming service, finds a new survey from consulting firm Deloitte. It's the first time the survey found more than half of homes subscribed to a streaming service.

But it's not just one service, such as Netflix, finding its way into homes. The average subscriber pays for three, Deloitte says, generating about $2.1 billion in spending monthly.

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Among those services, Netflix is the clear leader, with Amazon and Hulu next, according to a recent survey from Parks Associates.

Deloitte found a concurrent "inflection point" for providers of traditional pay TV service delivered via cable, satellite and fiber. Pay TV use fell to 63% in 2017 from 75%, the survey found.

And among those who no longer had pay TV, 27% said they had "cut the cord" within the past year.

There's much to trouble traditional pay TV providers in the survey. Nearly half (46%) of pay TV subscribers said they are dissatisfied with their service and 70% of all consumers said pay TV wasn't a good value. Among current pay TV subscribers, 56% say they keep pay TV because it’s bundled with broadband service. Among Millennials (ages 21-34), 22% say they have never subscribed to pay TV.



“Consumers now enjoy unparalleled freedom in selecting media and entertainment options and their expectations are at an all-time high,” said Kevin Westcott, Deloitte's vice chairman for U.S. media and entertainment, in a statement accompanying the report.

Overall, there's more than 200 streaming services consumers can choose from — and more are in the works. Among the recent entrants are Philo, a $16-a-month service launched in November with more than 30 channels including AMC, BET, Comedy Central, Discovery Channel and HGTV, and fuboTV ($19.99 first month, $44.99 monthly after that), which has grown from a sports-centric streaming subscription service launched in 2015 to include more than 70 channels including local CBS, Fox and NBC stations over most of the U.S.

In the works: a new ESPN Plus subscription service from Disney and, next year, a Disney subscription movie service with Disney, Pixar, Lucasfilm and Marvel movies and original TV series, and a new Fox News Channel streaming service called Fox Nation, expected to be available later this year.

Fox News will launch a new streaming service It’s called Fox Nation.

The growth could lead to some hard choices for consumers as their monthly streaming bills approach that of a traditional pay TV service, while leading to even more direct-to-consumer streaming options.

All major TV networks plan to launch their own by 2022, says Mike Berkley, an analyst with research firm The Diffusion Group. "Big media companies are reacting more boldly to changes in TV viewing behavior," he said in a recent report.

Streaming crosses the generational divide

Millennials may have led the way in the adoption of streaming video as a main entertainment source. But now, streaming knows no age barriers. Nearly one-half (48%) of all U.S. consumers streamed television content daily or weekly in 2017, compared with just 37% the year before.

The younger the streamer, the more likely they would binge-watch video. Among Generation Z (ages 14-20), 91% said they binge-watch, compared to 86% of Millennials and 80% of Gen X (ages 35-51). On average, 75% of all consumers said they binge-watched. Millennials watched the most episodes per binge-watching session: seven or more.



“Some hoped that as Millennials got older, they would settle down and watch pay TV," said Jeff Loucks, executive director, Deloitte Center for Technology, Media and Telecommunications, in a statement. "Instead, their Gen X parents are acting more like Millennials, using streaming services, watching TV shows, movies and sports on smartphones and binge watching.”

Plenty of American households pay a traditional TV every month. Nearly 92.2 million U.S. homes subscribe to pay TV, down about 1.5 million subscriber from 2016, according to Leichtman Research Group. That includes more than 3.3 million subscribers to streaming pay TV services DirecTV Now and Sling TV.

Still, "the pay-TV market saw net losses increase in 2017, and the continuation of a share shift from traditional services to newer Internet-delivered services,” said the research firm's president and principal analyst Bruce Leichtman in a statement accompanying the recent report.

Follow USA TODAY reporter Mike Snider on Twitter: @MikeSnider.