Streaming Video Delivers Blow To Paid Cable
Driven by the rise of streaming video and better over-the-top technology, cable-led paid-TV services peaked in 2011, and are now on track to
decline through 2017.
That’s according to new findings and forecasts from research group TDG, which reports that paid-TV subscriptions topped out at about 101 million in 2011, remained virtually unchanged in 2012, and will sink to less than 95 million by 2017.
“Netflix and Hulu Plus are one part of it,” Michael Greeson, director of research at TDG, said regarding the fate of paid TV. “But those services are still supplementary for most consumers.”
What will really accelerate the demise of pay TV is when consumers adopt new OTT technology -- from Apple and Intel -- as their primary entertainment services, according to Greeson.
“The arrival of this next generation of services is what’s going to change things,” Greeson. “They’ll be live in one year,” he predicted.
Today, 87% of U.S. broadband households currently subscribe to a pay-TV service -- a decline of almost five percentage points since 2010, according to TDG.
More to the point, a growing number of broadband subscribers are now doing without pay-TV services altogether, having either “cut the cord” or never signed up at all, Greeson points out.
In total, TDG considers 13% of U.S. broadband households -- 10 million -- to be “pay-TV refugees,” of which 2.6 million have never subscribed to a pay-TV service. By its estimates, 7.4 million once subscribed to pay TV but have since cancelled the service.
The majority of cord-cutters (71%) cite the high cost of paid TV as their primary reason for ditching such services, while 28% cite free online video-on-demand services such as Hulu. In addition, 25% cite paid VOD services like Hulu Plus and Netflix as reason enough for cutting their cords.
For its research, TDG used an online panel of 500 U.S. adult broadband users, which randomly selected from an online panel of several million consumers.