March 22, 2017
Significant numbers of broadband homeowners are going without pay-TV and new data says that their cord cutting trend accelerated significantly in 2016.
The balance is now in favor of broadband. More than two-thirds (68 percent) of consumers subscribe to a free or paid streaming video service compared to 67 percent for pay-TV service providers, according to Consumer Technology Association.
Almost a quarter of 100 million broadband homes (22 percent) in the U.S. have little or no usage of cable, satellite or telco TV, according to research company, The Diffusion Group (TDG). Five years ago in 2011, just nine percent of the 85 million U.S. broadband-equipped homes reported being cord “nils.”
Cord “nils” are both cord-cutters (77 percent of the total) and cord-nevers (23 percent of the total). These cord nils skew younger, poorer, more rural and slightly less educated than pay-TV subscribers.
Cost was cited as a reason not to subscribe by 68 percent of cord-cutters and 65 percent of cord-nevers, according to the report. That finding was reinforced by TiVo’s 16th quarterly “Video Trends Report.”
TiVo found that 17 percent of its subscribers cut the cord and 19.8 percent of those dropped pay-TV in the last 12 months. “Price/too expensive” was the top factor influencing respondents’ decision to cut the cord, cited by 80.1 percent of them. The second factor cited was use of a streaming service such as Netflix, Hulu or Amazon, which was cited by 48.3 percent of respondents.
Traditional pay-TV services face a significant market place challenge. The leading source of video for cord “nils” is DVD/Blu-ray discs (66 percent), followed by streaming services (58 percent) and over-the-air broadcast TV signals (approximately 58 percent.), accord to TDG.
Only eight percent of cord “nils” are moderately or highly likely to sign up for pay-TV in the next six months if lower prices were available. Lower pricing was the only factor having any potential impact on inducing potential subscriptions in The Diffusion Group survey.
Park Associates found that half of cord cutters have not subscribed to a pay- TV service in the past three years, and consumer dissatisfaction with prices has taken a toll on pay-TV penetration.
Leichtman Research found that the largest pay-TV providers, representing about 95 percent of the U.S. market, lost about 795,000 net video subscribers in 2016, compared to a loss of about 445,000 subscribers in 2015.