Teens flock to Netflix, YouTube as cord cutting accelerates: Piper Sandler

A new survey of American teen consumer trends revealed that Netflix (NFLX) and YouTube (GOOGL) remain the go-to streaming favorites as the cord cutting trend continues.

Piper Sandler's semi-annual teen survey, which polled 14,500 teenagers across 47 states between Aug. 12 and Sept. 23, found that 43% of respondents do not have cable TV in their household — up from 41% in the spring of 2022 and 17%, as of fall 2016.

The survey suggested further transition toward online video and streaming services, with 7% of teens surveyed saying that they expected their household to cancel cable TV within the next 6 months.

As for top streaming destinations for teens, respondents said they spent 32% of daily video consumption on Netflix and 29% on YouTube. The results at the top were roughly in-line with fall 2021's results, although YouTube saw a slight dip in consumption on a year-over-year basis.

Both Netflix and YouTube lead the way by a significant margin compared to other platforms, although streaming services like Disney+ (DIS), Amazon Prime Video (AMZN), and HBO Max (WBD) all gained share amid further declines in cable television.

Ad-supported to increase consumer choice

Cheaper, ad-supported tiers could further accelerate cord cutting trends as consumers look to cut back on spending amid worsening economic conditions.

"Cord cutting definitely stepped up in Q2," Well Fargo Analyst Steve Cahall wrote in August, "and we expect it to remain elevated given all the content shifting to streaming + consumers looking to trim their subscriptions due to the macro [conditions] and/or subscription fatigue."

Netflix and Disney are the latest platforms to hop on the ad-tier bandwagon, with the latter aiming to officially launch its ad option on Dec. 8.

Netflix recently announced two senior hires in its own efforts to roll out an ad-supported tier next year, although recent messaging signaled that the company may be moving up the launch to Nov. 1 to get ahead of Disney's timeline.

The ad-supported version will cost between $7 and $9 a month, according to Bloomberg, with the company planning to play four minutes of ads for every hour of content.

Earlier this week, JPMorgan Analyst Doug Anmuth estimated that Netflix could drive 7.5 million subscribers to its ad tier in the U.S. and Canada in 2023, leading to $600 million in advertising sales.

By 2026, Anmuth anticipated that Netflix's U.S. and Canada segment will boast 22 million subscribers and drive $2.65 billion in advertising sales.

While Netflix has enjoyed quite a few Wall Street upgrades in recent weeks as a direct result of the upcoming rollout, shares of the streaming giant are still down 63% so far in 2022.

Alexandra is a Senior Entertainment and Food Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com

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