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Comparing EU and US Cord Cutters

Americans are not the only ones cutting the cord. The vibrant and free-to-air broadcasting options available in most of the EU countries we surveyed makes paying for TV a hard sell, subscription video on demand or otherwise.

For instance, when we asked cord cutters and cord nevers why they cut the cord or never added a video service, 35% of German cord cutters/nevers answered that "rabbit ears" fulfill their video entertainment needs. All respondents from EU countries surveyed scored above 15% on this metric. But just 10% of U.S. survey-takers felt the same way.

We think the longer history with pay TV in the U.S., one that was forecast by Paul Kagan in the late 1960s, has left Americans with more paid TV options than Europeans, leading to fewer viewers stateside who mostly use over the air, or OTA.

But the longer pay TV history in the U.S. does not imply Americans like paying for the service.

Nearly half of American cord cutters/nevers said price was the main reason they cut the cord or never connected, the highest rate among all seven countries we reviewed. Americans pay close to $100 per month on average for traditional multichannel video services, with EU countries coming in lower. Sweden's average monthly fee for video is under $10 and survey-takers there were consequently less concerned with pricing. A significant factor in lower pay TV access prices in Europe is that sports and premium channels are only included in top TV tiers, with basic packages boosted by a large number of OTA channels.

And the nuances between European countries don't stop there.

Western Europe's smaller nations — Belgium, Netherlands, Switzerland, Portugal and the Nordics excluding Finland — representing seven of the 16 main markets in the region, tend to have much higher pay TV penetration rates, about 100% in some instances, and even higher in select markets due to multiple subscriptions per household. These are the markets where cord cutting poses an immediate risk or threat.

Markets such as Austria and Ireland benefit from neighboring Germany and the U.K., respectively, sharing the same language and enabling access to a larger slate of OTA content via satellite. The larger countries — France, Germany, Italy, Spain and the U.K. — are still experiencing growth, albeit slowly, largely due to the ability to support a much broader offering of OTA channels, limiting the potential for pay TV, which in recent years has been driven by bundling with broadband, telephony and mobile services.

U.S. survey-takers were also the only ones to say online video services were more important than free OTA in terms of why they cut the cord or never added a cord. For instance, while 10% of Americans said rabbit ears were enough reason to cut the cord, 14% said the same about online video services, including Netflix. Again, this could be a case of the U.S. being first to market with online video services and remaining relatively ahead of the pack.

As traditional media companies look towards a digital future it’s important to remember that what matters to US consumers might matter less overseas.

The full version of this report is available to clients here.

Data for this article was taken from the Kagan European Consumer Insights surveys that were conducted during the fourth quarter 2018. The EU online surveys included approximately 1,000 internet adults in six European countries. The European surveys have a margin of error of +/-3.0 ppts at the 95% confidence level. The U.S. online survey was also fielded in fourth quarter 2018 and included 2,523 internet adults for a survey margin of error of +/-2.0 ppts at the 95% confidence level.

Consumer Insights is a regular feature from Kagan, a group within S&P Global Market Intelligence's TMT offering, providing exclusive research and commentary.

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