Consumers are not racing to replace their pay-TV subscription with online video services from providers like Netflix and Hulu, according to new research from Nielsen. Nielsen says its research “busts the myth” that consumers are going broadband-only and cutting the cord — essentially canceling their cable subscriptions.
In fact, the research firm reports that just the opposite is happening: The number of households in the U.S. that have signed up for cable and broadband services has grown dramatically over the past two years. Nearly two-thirds of all U.S. households had both pay-TV and broadband subscriptions as of January, according to Nielsen, up from 61.6 percent in 2009 and 54.8 percent in 2008 as cable subscribers subscribers signed up for broadband to complement their existing pay-TV services.
Meanwhile, the percentage of households that has gone broadband-only increased just slightly over the same two-year period, to 3.9 percent from 3.2 percent in 2008, and remained essentially flat over the past 12 months.
As to online video, while Nielsen concedes that the number of people it grew 6 percent year-over-year, and the amount of time they spent watching video on the web grew 9 percent, it’s still a relatively small market compared to traditional TV. According to the research and measurement firm, only 2.5 percent of video viewing occurs online.
And according to Howard Shimmel, SVP of client insights for Nielsen, the shift to online video viewing only is happening in “small packets of the population” that “reflect a younger population of college graduates and lower to middle income consumers who may not be fully convinced of the need to pay for digital cable.” But those viewers also watch 40 percent less TV than the national average, and while they typically stream twice as much online video as the average U.S. consumer, they’re still only watching about 10 minutes of online video per day.
While the cable industry isn’t seeing a mass exodus from its pay-TV subscriptions yet, it should take heed of what happened in the telephony market over the last decade or so: in the early 2000s, mobile-only telephone users were limited primarily to a “younger population of college graduates and lower-to-middle income consumers” who were not convinced that they needed a landline in the home. While a relatively niche phenomenon then, the number of consumers who use their mobile as their primary or only phone has increased dramatically over the years, while the percentage of U.S. households with landlines has been in steady retreat.
That is to say: just because the trend hasn’t happened yet, doesn’t mean it won’t. Cable operators should keep an eye on recent college graduates. Their interactions with technology have a funny way of foretelling the future.
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