Cord Cutting Accelerates: Study Finds 25% of U.S. Homes Don’t Have Pay TV Service

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Three words haunt the dreams of pay TV executives these days: “Cord-cutting accelerates.”

The latest numbers on cord-cutting from research firm GfK might give a few people some sleepless nights. A quarter — yes, a full 25% — of U.S. homes don’t subscribe to a pay-TV service, according to GfK’s 2016 Ownership and Trend Report. About 17% rely only on broadcast signals for their TV needs, while 6% only use the internet to watch their favorite shows on a TV set, using either a device like a Roku or Apple TV or a Smart TV.

Among households headed up by those in the 18-34 demographic, those numbers are larger: 22% use broadcast-only reception, and 13% get TV on their set via the internet.

There are a few caveats, though. Some of these numbers do not jive with other pay-TV subscriber estimates, which hover around 99 million out of 116 million total U.S. households, and research from Leichtman Research Group has the percentage of non-pay-TV households at 13%. Every firm has its own methodology and panel of people surveyed, which can produce large differences.

The percentages of households relying on broadcast or internet TV and eschewing a traditional pay-TV bundle are increasing at a faster pace, it’s true. That said, “it’s a small slice of homes,” explains David Tice, SVP of GfK’s media and entertainment practice. “It’s gone from being half-a-percent change per year to two percent, in the case of broadcast-only.”

That doesn’t mean there isn’t cause for concern.

“I think everyone started panicking five years ago,” Tice said. Nearly a third of all households subscribe to a streaming TV service, according to GfK’s survey: 31% to Netflix, 16% to Amazon Prime Video, and 7% to Hulu. (There’s some overlap in subscriptions.) That’s why you’ve seen Comcast put serious muscle behind its shiny new X1 system, the cable box that is more computer than clunker; and why satcaster Dish Network created a skinny internet TV bundle (Sling TV).

The difference is an attitude shift, particularly among those ages 35 and older.

“For people in that younger age group, they’ve grown up with streaming; it’s something they expect to be able to do,” Tice said. It was perhaps an inevitability that they would become a generation of cord-nevers, particularly after coming of age in a period of prolonged economic turbulence. That might explain some of GfK’s statistics around household income level and cord-cutting:

  • Cord-cutters: $59,000/year
  • Cord-nevers: $47,000/year
  • Total population: $65,000/year

But what’s more troublesome for the pay TV industry is that older, more affluent households are looking at dropping their pay-TV bundle. “It’s people who can have pay-TV but choose not to,” Tice adds. “It’s more of a lifestyle choice than an economic one.”

On the plus side for many pay-TV companies’ bottom line, the streamers have to get their internet from somewhere — and, for the most part, that means forking over $50 a month to Comcast, Time Warner Cable (soon to be Charter) or Verizon FiOS.

Tice also believes it won’t be too long before we hit a point when all the people who are going to rely on streaming TV have made their choice, and a new status quo is achieved. “Everything plateaus at some level,” he said.

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  1. shanna says:

    I just dropped my cable TV recently and much happier with free TV.

  2. Chuck says:

    In some cases, I’d say its a political and principled choice to not have paid TV in the home. Doing so supports companies and news agencies that have shown to be biased and corrupted.

  3. Peter says:

    I’m neither under 35 nor living paycheck to paycheck. I cut the cord over a year ago for a variety of reasons. Cost was one. Awful programming and constant commercial interruptions were the others. I don’t miss cable a bit.

  4. jose ventura says:

    and another thing i dont earn $59000 a yr i cut the cord a long time ago because it is just to damn expensive !!!!!

  5. jose ventura says:

    ok the difference is that you can pick and chose your subscription i wanted commercial free tv i got netflix hulu and prime tv you pay the cable company $130 a month you still have to watch the commercial i only pay $35 a month for netflix hulu and prime tv i totally ditched the cord and rabbit ears for around 3 years now so yes !!!!!! you no longer need to buy a contract and a cable box to get your favorite tv shows !!!~ you have your choices now !!!!

  6. Sundi says:

    Cord-cutting is never gonna win as long as these cable companies run things in this country. I love sports and it’s impossible to replace all of it. By the time you get SlingTV, Netflix, Hulu, Prime and other services, and add to the expensive broadband price.. You’d be better off keeping cable bundled with an internet plan

    • The advantage of cord-cutting is that you don’t have to subscribe to a legion of services if you don’t watch that much. That’s what people are rebelling against: having to pay large, ever-increasing TV bills when they watch just a fraction of the channels, and would probably be happy to stick with something like Netflix or Sling TV. Heck, there’s enough on YouTube that some people (especially gamers and gadget fans) wouldn’t even need to go that far.

      • Peter says:

        I subscribe to Netflix, Hulu, and Sling, and I get broadband through a small provider. I save nearly $90 a month over what I used to pay Comcast for a basic bundle. Your math doesn’t add up, at least not in my world.

  7. jose ventura says:

    on demand tv is the future !!! rabbit ears simply suck !!! if you live in a apartment like i do getting dish will be hard i prefer to stream my show because they offer commercial free tv and cable tv is to expensive !!! i spend around $35 month and i use att pro you will save around $450 us d a year !! if you cut the cord and ditch those rabbit ears !!! i use hulu netflix and prime tv i get % 90 percent of all my favorite tv show this way !!!!! i love commercial free tv

  8. Bozo says:

    The only thing i ask. who wants to pay for the crap that is on the Idiot Box now?
    Just use over the air.. Get netflix, hulu and amazon.. You can watch what you want, when you want..
    And a good net speed… Even then you are saving 50 bucks a month +//

  9. Leah says:

    jhs39 – Comcast forced you in to TV to get internet? Are you not an adult? Can you not make your own decisions? If you don’t like it, don’t buy it! Don’t be a baby an dump your ignorant decisions on everyone else!

    • Nonuna says:

      Leah: Comcast didn’t really force jhs39 into getting the TV package, they do entice you to get the TV plus internet package through a number of different means. Sometimes, the TV plus internet package can be less expensive than the internet only package.

      I know that in my area, my ISP has internet only and TV plus internet packages, the internet only package has a data cap, the TV plus internet package doesn’t, so depending on how much you use the internet, the TV plus internet package can be cheaper.

  10. jhs39 says:

    Cable companies are starting to resort to shady tactics to boost their subscriber numbers. I switched my internet from AT&T to Comcast because of the difference in speed for the price. But Comcast artificially inflated the price of its internet so that internet only costs fully twice as much as internet (exact same speed, mind you) combined with a skinny cable TV bundle. I have no interest in the cable part of my subscription, which is SD, and I never watch it but Comcast can claim I am a cable subscriber since they essentially forced me to be to get the internet. It would be interesting to see numbers for people who actually subscribe to cable because they want it rather than because it’s force-bundled with another service.

  11. Dunstan says:

    This article completely overlooks how many actually watch series typically available only on pay TV: they watch it for free on the internet.

    • jhs39 says:

      I think those people would be included among the cord cutters unless I’m missing something in your comment. The study was about whether people have cable/satellite or rely on streaming instead. People who stream shows from the internet legally or through something like Kodi would be counted in the streamers instead category.

  12. Dunstan says:

    Wait. There are pay TV executives? :D

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