More Americans cut the cord as streaming services shift to ad-supported models

The number of U.S. households moving away from traditional pay television continues to rise, with new research from Parks Associates showing that 46% of internet households have cut the cord.

That figure represents 56 million households that previously subscribed to pay TV but have since switched to alternatives such as streaming services, free-to-air broadcasts, or other online platforms. Additionally, 12% of internet households have never subscribed to traditional pay TV.

The shift in viewing habits has prompted streaming providers to adjust their business models. Many are turning to hybrid monetization strategies, including ad-supported video-on-demand (AVOD) and free ad-supported streaming TV (FAST) services, as consumers look for lower-cost options.

According to the firm’s Video Services Consumer Insights Dashboard, 59% of subscriptions across the eight leading streaming video-on-demand (SVOD) services in the third quarter of 2024 were basic-tier subscriptions with ads. These platforms include Max, Netflix, Disney+, Discovery+, Paramount+, Prime Video, Hulu and Peacock.

“Cord Nevers represent a unique opportunity for streaming providers,” said Jennifer Kent, vice president of research at Parks Associates. “By definition, this segment of the market has not paid for traditional pay TV, but streaming services have found a way to monetize a segment that has not previously valued subscription video or has grown up in a streaming-first market, with different conceptions of what subscription video should be.”

As streaming costs have risen, consumers have adjusted their spending. Parks Associates notes that years of inflation and subscription price increases have led to greater competition among services, with many platforms expanding ad-supported offerings. These lower-cost tiers appeal to consumers while allowing streaming services to generate revenue through advertising.

“The continued spending increases in streaming, coupled with economic pressures, are leading consumers to pare down accordingly,” Kent said. “This only intensifies the competition among streaming vendors and will fuel more growth of subscription tiers with ads and free ad-based services.”

The Video Services Consumer Insights Dashboard tracks trends in the video market, offering data on consumer behavior, service adoption, and pricing strategies. As the industry evolves, streaming platforms are expected to continue refining their pricing models to attract and retain subscribers.

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