GigaOM » Leichtman Research Group

Cable still beating telcos at the broadband game

Stacey Higginbotham — Thu, 31 May 2012 16:35:15 +0000

Cable continues to crush telcos when it comes to stealing broadband customers, according to new data out today from the Leichtman Research Group. The analyst firm noted that during the first quarter of the year cable and telcos representing 93 percent of the U.S. market added 1.3 million new subscribers, bringing their total nearly 80 million subscriptions. A year ago the top providers had 76.6 million subscribers.

As has been the case since 2006, cable companies have the most subscribers, with 45.3 million broadband subs now, while the top telcos have 34.6 million subscribers. This dynamic isn’t likely to shift anytime soon given the improvements that cable providers have made in terms of delivering faster speeds to customers as they upgrade to DOCSIS 3.0 networks. Meanwhile, telcos are stuck offering DSL or fiber-to-the-node products that top out at speeds that are far below cable’s. The primary exception to this is Verizon’s FiOS fiber-to-the-home product — on Wednesday Verizon said it would offer a 300 Mbps tier.

The top cable companies added about 980,000 subscribers, representing 75 percent of the net broadband additions for the quarter, versus roughly 320,000 from the top telephone companies. Top broadband provider Comcast added 439,000 broadband subscribers in the first quarter of this year – the most in any three-month period since the first quarter in 2008 and more than all of the telcos combined.

Photo courtesy of (CC BY 2.0) Flickr user The Consumerist.

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Why you’ll buy a new TV in the next 5 years

Ryan Lawler — Mon, 16 Jan 2012 20:03:49 +0000

A few weeks ago, I wrote a post entitled “The incredible shrinking TV replacement cycle,” which used some data to illustrate how TV buyers have started bucking the longtime trend of upgrading their TV screens every seven to eight years, and theorized that TV purchasing will continue to accelerate over time. After seeing the best that CE manufacturers had in store at CES, I’m even more convinced. But not for the reasons you might think.

Where we are now

The combination of low price, increased functionality and the HD upgrade cycle have spurred consumers to adopt HDTVs en masse. According to recent research from Leichtman Research Group, about 70 percent of Americans now have at least one HDTV — up from 17 percent five years ago. Moreover, a number of those consumers already have multiple HDTVs, with about half of all HDTV households owning two or more.

I personally think that’s a trend set to continue, but not everyone agreed. In fact, I received a fair amount of criticism in the comments on the original post, as well as on Twitter and on other sites. (Check out Alexis Madrigal’s “The New Laws of TV Upgrading” for a pretty complete counter to that original post.)

The key argument against seems to go like this: Consumers bought a bunch of HDTVs over the past five years to take advantage of a noticeable difference between SD and HD feeds of their favorite content. But now that they’ve got the right-sized pane of glass for their living rooms capable of displaying HD video, there’s little reason for them to go out and buy a new TV. In other words, the HD revolution is nearly over.

The dumb smart TVs of CES

The counter-argument is that there will soon be a new revolution of smart TVs to pick up after the HDTV craze has worn off. And after attending the Consumer Electronics Show last week and seeing all the hot new HDTVs, 3-D TVs and Smart TVs available, I’m even more convinced consumers will soon be buying new TVs in increasingly shorter periods of time. But it’s not because I believe this year’s TVs are such a huge step above last year’s TVs that consumers will want to run out and get them.

In fact, just the opposite is true. This was illustrated in a dinner I was having with a few other journalists and executives Wednesday night when one of them asked what TV I would buy, of everything I saw on the show floor and in demos. The answer was easy. “None of them,” I said.

The reason is this: there are better things to come. There’s a huge opportunity for real innovation on the TV that’s gone completely untapped. But I have a feeling that’s going to change, and that change is going to come sooner than most think. Until it does, I’m sitting on the sidelines.

Where are the killer apps?

The killer app for most smart TVs today is Netflix. Pretty soon, pay TV operators like Comcast and Time Warner Cable and Verizon will make their services available as well. And HBO has some pretty ambitious plans to bring its authenticated on-demand service to connected devices.

But in each case, what we’re really talking about is making more TV available on your smart TV, but delivering it over the Internet. Think about that for a second: The main reason for most consumers to buy a smart TV today is to gain access to more of the same stuff that they already watch through cable.

And that gets to the heart of why I believe we’re on the cusp of another huge upgrade cycle. Today’s TVs are not much smarter than they were a year ago, or even two or three years ago. And that’s why everyone who already bought a shiny new HDTV set or even a first-generation “smart” TV will soon be in the market for a TV with some actual smarts built-in.

Real innovation is yet to come

Think about all the things that you could do with a truly smart TV that haven’t been enabled yet:

HDTVs with cameras built-in could enable viewers to video chat with friends while watching a TV show together on the big screen. You know, real social viewing.
Smart TVs could provide personalization of content and easier discovery of your favorite shows. As creepy as it may seem, facial recognition — like that enabled by Microsoft Kinect and shown off by Samsung at CES — could finally break down household usage and target TV programming based on who’s watching the box at any given time.
Sports broadcasters could overlay real-time stats on a sidebar that runs alongside a football matchup, or provide a synchronized experience with a second-screen tablet or mobile app. Viewers could get fantasy updates or manage their teams in real-time from those apps.
Networks could provide additional features — director commentary, behind-the-scenes footage, additional information about actors and scenes, etc. — into apps and make them available on TVs and other screens. (I’m thinking of extending HBO Go’s Game of Thrones interactive features, which had only been available when streaming in the web browser, and bringing them directly to the TV.)
TV apps could provide real-time polling for competitive reality shows, replacing text messaging and Twitter counts. How many Google TVs do you think would sell if you could vote for your favorite American Idol directly from an app while watching the show live?
For the enterprise, connected TV apps could provide new levels of collaboration and video conferencing tools, without the need to hook into expensive proprietary systems.

Of course, there are a number of technology companies looking to enable these types of features, but very few implementations have actually come to market, and none of them are mainstream. The important thing here is that the software is becoming more capable and powerful much more quickly than the hardware is changing. That means that the next wave of TV buying won’t be driven by screen resolution, refresh rate, screen size or the like, but by the power of the apps available on the TV platform.

Looking to mobile for clues

It wasn’t too long ago that the killer app on mobile handsets was email. A user might have upgraded when his two-year contract was up to get a phone with a camera, or maybe not. Mobile web was a joke.

And then the iPhone came along and people realized the opportunity that was available through an open apps ecosystem that allowed developers to create new experiences that were previously unheard of on the TV.

Anyone who’s looked at connected TVs today and decided that there’ll be no reason to upgrade in three years hasn’t considered the possibility of future apps or what sort of change is in store. The next generation of connected TVs won’t just be panes of glass that you watch Netflix on. They’ll be smart devices will full-on interactive components that will fundamentally change the way we engage with TV programming and with each other. And when that happens over the next few years, CE makers will be giving consumers a real reason to buy another new TV.

Photo courtesy of Flickr user Sugar Pond.

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The incredible shrinking TV replacement cycle

Ryan Lawler — Fri, 06 Jan 2012 00:34:18 +0000

Consumers only replace their TVs every seven or eight years: That’s been industry gospel and is frequently cited as a reason for slow smart TV adoption, as well as one reason many people say Apple shouldn’t enter the TV business. But the rapid adoption of HDTVs suggests that old wisdom might be becoming outdated, as prices fall and consumer electronics manufacturers add new features and content to their HDTV sets.

As part of the its Fourth Quarter 2011 Report, Leichtman Research Group noted that over the past five years, more than half of U.S. households have adopted HDTV sets. LRG found that by the end of 2011, 69 percent of households in the U.S. had at least one HDTV set, which is up dramatically from 17 percent five years ago. What’s more, about 20 percent of all households bought HDTVs last year, with another 19 percent expected to purchase HDTVs over the next 12 months.

But that only tells part of the story, as a growing number of consumers have two or more HDTV sets in the home. According to LRG, about half of all HDTV households have more than one set in the home. And about a third of all households have multiple HDTVs. That’s up from about a sixth of all households two years ago, and 4 percent in 2006.

What that speaks to is much more frequent purchasing among consumers than TV manufacturers typically see. It also is part of a phenomenon by which consumers don’t necessarily get rid of older sets, but move them around the house when they get a new HDTV. So what they’re really replacing is the TV set that gets watched the most — typically the one in a family’s living room.

So what’s driving the increased adoption?

Pretty clearly the number one factor is a drastic decrease in price among HDTVs. LRG’s research shows that the mean spending on an HDTV set was about $940 in 2011. That’s down 23 percent in less than two years, and half of what consumers paid five years ago. Even at the low end, prices are no longer out of reach for most consumers: a 32-inch flat-panel LCD HDTV can typically be had for as little as $250 on Amazon.com.

Not surprisingly, HDTV ownership is concentrated among those who can afford to splurge on consumer electronics. LRG reports that 85 percent of households with an annual incomes of more than $75,000 have an HDTV. That compares with 67 percent of households that make between $30,000 and $75,000. But HDTV adoption isn’t just limited to the rich and middle class: Falling prices mean that nearly 50 percent of households with incomes of under $30,000 also have HDTVs.

HDTVs might not have reached the two-year replacement cycle that most consumers have for their mobile phones, but consumers are definitely making HDTV purchase decisions more often. Those decisions are happening more along the lines of the three- to five-year cycles that consumers have for computing devices.

“Low prices make it tempting for people to replace their TV sets more often. We estimate that today’s household replaces it’s TV set every four to five years. If TVs continue to get bigger, better and significantly cheaper, we estimate that people will replace them more often,” Retrevo spokesperson Jennifer Jacobson wrote in an email.

And as time goes on, there might be another reason for consumers to begin replacing their TV sets — or at least, the TV sets in their living rooms: They might soon become obsolete. As more and more “smart” TVs enter the market, the applications and app development frameworks available on the first generation of Internet-ready televisions will find themselves eclipsed by more powerful and attractive options. In the same way that consumers upgrade their mobile and computing devices for those with more features and processing power, they could soon find themselves replacing those early connected TVs to take advantage of new applications and capabilities.

Photo courtesy of Flickr user Sugar Pond.

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Thanks to cable firms, the U.S. adds 635,000 new broadband subs

Om Malik — Thu, 01 Dec 2011 16:04:59 +0000

Eighteen of the largest cable and telecom companies added about 635,000 net new subscribers during the third quarter of 2011, with a majority of the subscribers – 83 percent or 525,000 – coming from cable companies and the rest from telephone companies, says Leichtman Research Group, a Durham, NH-based research company. In comparison, during the third quarter of 2010, the total new broadband additions were 800,000.

These 18 companies that include the likes of Comcast, Verizon, AT&T and Time Warner Cable account for about 77.8 million broadband subscribers in the US. Cable companies have 43.6 million broadband subscribers while phone companies have 34.2 million subscribers.

Here are some highlights from the stats provided by LRG.

Comcast added 261,000 broadband subscribers in the quarter – 41 percent of the total for the top providers.
AT&T and Verizon added 642,000 fiber subscribers in the quarter (via U-verse and FiOS), while having a net loss of 619,000 DSL subscribers.
The top cable broadband providers have a 56 percent share of the overall market, with nearly a 9.5 million subscriber advantage over the top telephone companies – compared to 8.2 million a year ago.
Over the first three quarters of 2011, the top broadband providers added nearly 2.3 million subscribers, compared to 2.6 million subscribers added in the first three quarters of 2010

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Cable still beating out telcos in broadband adds

Stacey Higginbotham — Thu, 25 Aug 2011 19:40:55 +0000

DSL is on the ropes, and cable companies are seeing their broadband numbers rise, according to data on broadband sign-ups during the second quarter. Leichtman Research Group found that the top 18 providers in the U.S. acquired about 350,000 net additional high-speed Internet subscribers in the April-June period. Net broadband additions in the quarter were the second fewest of any quarter in the ten years LRG has been tracking the industry.

That’s pretty significant. It means that new subscribers are hard to come by, so gains for providers will come from the competition — and so far, cable and fiber products are the winners there. For every consumer that added service from a telecom provider, cable providers added three. The top cable broadband providers have a 56-percent share of the overall market, with 8.9 million more subscribers than the top telephone companies – compared to 7.85 million this time a year ago.

But all is not lost for telecom companies — at least those that are upgrading to fiber. AT&T and Verizon added 628,000 fiber subscribers in the quarter (via U-verse and FiOS), while losing 578,000 net DSL subscribers. No wonder Time Warner Cable’s CEO thinks broadband is his company’s future and AT&T’s CEO says DSL is obsolete.

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Cord cutters not replacing cable TV with online video

Ryan Lawler — Mon, 25 Jul 2011 16:13:18 +0000

New research suggests that people who have cut the cord aren’t doing so because they think Netflix provides a good alternative to their local cable TV company. In fact, those that go broadband-only are only slightly more likely to watch online video than those with pay-TV subscriptions, according to the latest data from Leichtman Research Group.

According to the research firm, 8 percent of U.S. households subscribe to broadband services without also having a pay TV subscription. That compares to the 70 percent of U.S. households that pay for both broadband and pay TV. But that minority of broadband-only subscribers is doing so mainly due to the cost of pay TV services, not the convenience of online video as a replacement.

The common perception is that users who “cut the cord” or go without cable TV are largely relying on online video services like Netflix or Hulu Plus instead. But LRG reports that the percentage of broadband-only households that watch online video is only slightly higher than those that pay for cable. About 19 percent of broadband-only users watch online video daily and 55 percent do so weekly. By comparison, 17 percent of those who subscriber to cable TV and broadband watch online video daily, and 48 percent do so weekly.

Only 5 percent of broadband-only subscribers say they have kicked the pay TV habit because they can find what they want to watch online instead, and just 2 percent cite Netflix in particular as a reason for cutting the cord. A whopping 28 percent of broadband-only households cite cost as the main reason they don’t subscribe to cable, with another 26 percent saying they just don’t watch that much TV. 18 percent claim to have no need for a pay TV subscription. Income also seems to play a big part in who decides to pay for cable and who doesn’t: Those who go broadband-only have an household income that’s 10 percent lower than average and 20 percent lower than those that subscribe to broadband and pay TV.

Photo courtesy of (CC BY 2.0) Flickr user Mykl Roventine

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Want Broadband? Odds Are, You’ll Choose Cable

Colleen Taylor — Tue, 17 May 2011 17:01:14 +0000

TV ownership, and eventually, pay TV subscriptions may be on the downswing, but that doesn’t mean cable companies will need a pity party any time soon. According to data released Tuesday, big cable firms including Comcast and Time Warner are providing the lion’s share of broadband subscriptions. In fact, when it came to choosing a broadband Internet provider in the first quarter of 2011, two out of three people signing up chose a cable company, and one out of three chose Comcast.

According to research released Tuesday by the Leichtman Research Group, the top cable broadband providers hold a 56-percent share of the entire market– besting the top telephone companies broadband market share by a total of 8.6 million subscribers. The top cable companies added over 850,000 subscribers in first quarter 2011, while the top telephone companies added around 425,000. Comcast alone added 418,000 broadband subscribers, representing the most quarterly new subscribers for the firm since the first quarter of 2008.

Among other things, the research indicates that Comcast’s Xfinity re-branding – the source of a few snickers when it was announced in 2009 — seems to be doing just fine. And while Nielsen data released earlier this month confirmed TV ownership is on the decline for the first time in nearly two decades, the top cable companies have positioned themselves nicely to benefit from any consumers opting to get their entertainment on the Internet instead.

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Online Video Viewing Up, Impact on TV “Negligible”

Chris Albrecht — Mon, 23 Feb 2009 16:31:11 +0000

Television is still king, despite gains being made online. That’s according to two separate research reports released today. Taken together, the studies from Nielsen and Leichtman Research Group (LRG) also help illustrate how newteeve is impacting oldteevee (hint: it isn’t).

In its A2/M2 Three Screen Report for the fourth quarter of 2008, Nielsen found that video consumption is up across all three video screens. In the U.S. each month the average TV watcher soaks in 151 hours of television (an all-time high), the average online video viewer watches some three hours’ worth of content on the web, and people who use mobile video watch almost four hours of video on their phones and other wireless devices.

The overall number of people watching video across the three screens is up as well, with the number of people watching time-shifted television jumping 37 percent year over year to stand at almost 74 million vs. nearly 54 million people in the fourth quarter of 2007.

Some of the other key takeaways from the Nielsen report include:

31 percent of Internet activity occurs when consumers are also watching television.

At 7 hours, 11 minutes per month, timeshifted TV is watched at double the pace as video online. But young viewers (18-24) watch video on the Internet and on a DVR at the same rate: about 5 hours per month.

Men continue to watch video on mobile phones more than women, and women continue to watch video on the Internet and television more than men.

During the fourth quarter, growth of online video was driven by events such as election coverage and the SNL/Sarah Palin clips.

Weekdays outpaced weekends for online video viewing in October with 65% of online video viewers streaming content between 9am–5pm Monday through Friday, versus 51% of online video viewers logging on between 6am–8pm on weekends.

Despite the bad economy, the number of homes with DVRs continues to grow – more than 29% of U.S. homes are able to timeshift television, up from 27% in 3Q08.

Elsewhere, LRG came out with its own research, finding that 34 percent of adults who have online service at home view online video weekly, compared with the 31 percent who did so last year.

When it comes to the cable companies starting up their own online video services, LRG found that TV shows are low on the list of content that users watch online. Further, online video’s impact on TV watching and cable subscriptions has been “negligible.”

Key findings from the LRG study include:

Overall (including those not online), 1% of adults view recent TV shows online daily, and 8% weekly – compared to 6% weekly last year

Overall, 24% of adults report viewing a news clip online weekly, 20% view YouTube or other user-generated video online weekly, and 15% view sports news or highlights online weekly

93% of adults with a TV report spending at least an hour a day, on average, watching TV, and 35% of adults spend at least four hours a day watching TV – similar to last year

8% of adults who watch video online strongly agree that they now watch TV less often, while 75% strongly disagree

18% of teens who watch video online strongly agree that they now watch TV less often, while 61% strongly disagree

Among all adults online, 3% strongly agree that they would consider disconnecting their TV service to just watch video online – compared to 4% last year

Those who watch recent TV shows online weekly are no more likely to consider disconnecting their TV subscription than others

While weekly online TV show viewers spend twice as much time online per day as the average adult, they are also more likely than average to subscribe to a premium service, have digital cable, use on-Demand, have an HDTV, and subscribe to a bundle of services from a single provider

Just 6% of those who watch recent TV shows online weekly are likely to switch from their multi-channel video provider – compared to 11% of others

It would have been nice if rather than just making clear who is hanging onto their cable subscriptions, LRG had shed some light as to why they’re doing so. We’ll need to keep an eye on these stats moving forward. Perhaps in these recessionary times, people see cable as a bargain.

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Best Buy Forecast Down, Number of HDTVs Up (and Down)

Chris Albrecht — Wed, 12 Nov 2008 16:28:49 +0000

You take the good, you take the bad, you take ‘em both and there you have — the facts of the consumer electronics market. The sector was a mixed bag o’ news today; retailer Best Buy lowered its fiscal 2009 outlook, while new research indicates that roughly one-third of U.S. households now have at least one HDTV set, though sales are slowing down.

Best Buy CEO Bradbury H. Anderson said today that the company was experiencing a “seismic” change in consumer behavior (and not in a good way). The chain cut its earnings outlook for the fiscal year ending in February to $2.30-$2.90 a share from a previous estimate of $3.25-$3.40 per share and said it sees revenue coming in between $43.7 billion and $45.4 billion. That compares with the average analyst forecast of $3.02 a share on sales of $46.23 billion.

The retail chain’s grim predictions follow news this week that troubled rival retailer Circuit City filed for Chapter 11 bankruptcy protection.

But buck up, buttercup. It’s not all doom and gloom.

Leichtman Research Group released a study today showing that 34 percent (about 40 million) U.S. households have an HDTV. That’s twice the number of households that owned an HDTV two years ago and LRG predicts this number will double again over the next four years. The survey also found that 33 percent of HDTV owners have more than one HDTV set and 25 percent are likely to get another one in the next year.

That 25 percent better get crackin’. Not to bring you down again, but according to research firm DisplaySearch, shipments of flat panel TV sets in the U.S. were up only 21 percent in the third quarter of this year, compared with the previous six quarters that saw unit sales increased at least 41 percent. Translation: people weren’t buying as many TVs. And as The New York Times points out, those DisplaySearch numbers were just through September, when the market started to go south. Unless something drastic happens, this holiday season is likely to get worse.

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Study: DVRs in 27 Percent of TV Homes

Chris Albrecht — Mon, 15 Sep 2008 21:00:53 +0000

New research reaffirms that there’s a DVR boom underway, so why can’t TiVo capitalize on it? Leichtman Research Group (LRG) said today that 27 percent of TV households in the U.S. have at least one DVR, and 30 percent of those homes have more than one. Bruce Leichtman, president and principal analyst for LRG, is quoted as saying that the number of DVR households in the U.S. basically doubled in the past two years and will double again in the next four years.

LRG’s estimate is in line with recent data from Nielsen, which put the DVR install base at 25 percent of U.S. homes.

Other findings from the LRG study include:

68 percent of DVR owners say they usually watch recorded DVR programs when there is nothing on regularly scheduled TV
35 percent of DVR owners feel that they spend more time watching programs recorded on their DVR than regularly scheduled programs
45 percent of DVR owners record five or fewer programs per week

Backing up a previous study from NDS, LRG found that people really like their DVRs, with 87 percent saying they’d recommend their DVR service to a friend (they must not be Comcast subscribers).

So why isn’t TiVo, the name synonymous with DVR’ing, king of the world? Because of cable. Our friends at TV By the Numbers have been keeping track, and while cable offerings are attracting more than a million new DVR subscribers a month, TiVo is losing 50,000 subs a month.

And things won’t get any better once people can kick those bulky standalone set-top boxes for a network DVR.

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