The shift to OTT-only with no traditional video service has in the past been driven largely by younger consumers but now older Americans are increasingly cutting the cord.
Cowen Equity Research said that OTT-only adoption has either stabilized or moderated across the 18-29 age cohorts over the past year while the 60+ age cohort is still showing steady meaningful increases. The research firm said that age group now represents 17% of all OTT-only subscribers but represents 28% of the U.S. adult population.
“With the increasing number of OTT choices, smart TVs/OTT device adoption, growing familiarity and ease of use, we continue to believe this older cohort could be the largest contributor of incremental OTT-only growth,” wrote Cowen analyst Gregory Williams in a research note.
However, Cowen has seen moderation in cord-cutting levels in recent months. The firm’s survey shows 39% of subscribers are “cord cutters and cord nevers,” which is at a similar level as the year prior but up from 34% two years ago. That moderation could be attributed to several factors including increased adoption of multiple OTT service by cable subscribers – Cowen said the average number of services jumped to 2.77 from 2.29 one year ago.
Williams also noted a "free trial effect," stimulus relief and bundle discounts – including wireless deals like AT&T/HBO Max and Verizon/Disney+ — as potential moderating effects on cord cutting.
Charter most clearly demonstrated a cord-cutting slowdown after reporting video subscriber adds in both the second and third quarters. Cowen’s research suggested that Charter disconnects are down three consecutive quarters.
“Still, with large OTT players having launched in 2020 (Peacock, HBO Max), AVODs coming to fruition in 2021, new players still to enter (Paramount+), new/fresh content returning as production ramps up through the ‘vaccine era,’ and older cohorts adopting OTT, the cord-cutting story is still in early/middle innings of the upcycle,” wrote Williams.