Fewer TV Homes Pay For Multichannel Video Services

by Wayne Friedman , August 9, 2013

The percentage of all TV homes paying for a multichannel video service has slightly declined from three years ago.
Now, 86% of TV homes are subscribers to either a cable, satellite, or telco services -- down from 88% in 2010, according to the Durham, N.H.-based Leichtman Research Group. Nielsen says its national TV household universe is 115.6 million TV homes.

The 88% penetration rate of three years ago increased from 82% five years ago.

Leichtman also says major multichannel video providers have reported a cumulative increase of less than 1% of subscribers over the past three years. The study says this disparity of lower penetration of U.S pay TV customers and the higher number of subscribers can be attributed partly to the increase in rental homes over the past three years.

Research says 42% of non-subscribers get at least one of the subscription video-on-demand services (SVODs) -- Netflix, Amazon Prime, or Hulu Plus. Leichtman says among the TV homes that do not currently subscribe to a multichannel video service, 40% subscribe to Netflix, 11% to Amazon Prime and 7% to Hulu Plus. But 58% of non-subscribers don’t get any of these top three SVODs.

Overall, 8% of all TV homes watch over-the-air (OTA) broadcast TV only -- down from 10% in 2010 -- while 6% watch a combination of OTA and SVOD programming.

Bruce Leichtman, president and principal analyst for Leichtman Research Group, stated: "While some consumers continue to go in and out of the category, economic factors appear to be a strong force in shaping this market as the emergence of over-the-top alternatives alone."

The telephone survey of 1,319 adults age 18 and older from throughout the continental U.S. was conducted in May through June of 2013

4 comments about "Fewer TV Homes Pay For Multichannel Video Services".

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Christopher Blair from SynCom Media Group, Inc., August 9, 2013 at 6:57 p.m.
JUNE 17, 2013 12:50 PM BY DAVID TICE IN MEDIA & ENTERTAINMENT, TECHNOLOGY
Last year in this space I discussed how trends from The Home Technology Monitor™, a syndicated research service from GfK’s Media and Entertainment team, challenged my skepticism about cord-cutting being a substantial issue. I was very doubtful that people were abandoning pay TV for online services and putting the traditional TV model in imminent danger of collapse. However, the data showed that from 2011 to 2012, homes with broadcast-only reception increased a statistically significant level for the first time in over five years; maybe there was something to worry about.
This year, I’m here to report that just-released 2013 data from The Home Technology Monitor™is confirming the higher level of broadcast-only homes. Although not a significant increase over 2012, it is showing another directional increase – we’re seeing 19.3% of TV homes reporting broadcast-only reception, compared with a level of 17.8% in 2012, and as low as 14% as recently as 2010. Projected out, this means that in 2013, roughly around 22 million homes rely only on over-the-air broadcast rather than pay TV service.
As we mentioned last year, these cost-conscious TV homes may be reaping some of the benefits of the transition to the digital TV (DTV) broadcast standard, making use of that enhanced digital broadcast signal and its better video and audio quality. Another feature of digital broadcasting is the numerous over-the-air digital side channels, offering a variety of additional programming in addition to the main broadcast channels. In larger markets, this means there may be over 20 total channels via over-the-air (OTA) broadcast signals
That being said, there is no denying that online or streaming video does play a role, and one that continues to creep up into the mainstream. But is it currently the primary driver of people moving back to broadcast-only reception? Our data still don’t point to that conclusion.
I continue to wait for the economy to really gain traction and pick up, which will be the real test if people maintain their broadcast-only status even as economic concerns lessen. That’s when I’ll decide if I’ll pull my toe out and jump in the deep end of the cord-cutting pool.
David Tice is Senior Vice President, Media and Entertainment, at GfK. He can be reached atdavid.tice@gfk.com.
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Douglas Ferguson from College of Charleston, August 12, 2013 at 8:12 a.m.

When I see a wide disparity between a survey (GfK) and a industry census (Nielsen), I start to wonder about the reliability of the sample. Whey would a census of multichannel providers show 92 percent penetration, but a survey sample shows only 81.7? Bad sample? Or is Nielsen wrong? Which is more credible?

James Smith from J. R. Smith Group, August 12, 2013 at 10:04 a.m.

I hear you on that point Doug! My "boots-on-ground" sources suggest that the MSO video downgrade/ disconnect rate has more traction than article suggests...also OTA digi-net viewing is increasing. Incessant hikes in station and cable net sub fees are not sustainable, save for top-tier sub cohorts, given economic milieu.

Bobby Campbell from Adkarma, August 12, 2013 at 11:03 a.m.

Millennnials are abandoning multichannel services and linear viewing