×
You will be redirected back to your article in seconds

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

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.

More Biz

  • Daily Show Viacom

    DirecTV, Viacom Avert Blackout After Marathon Negotiation

    DirecTV and Viacom have agreed on a carriage renewal pact covering a raft of Viacom’s cable channels after a marathon negotiation over the weekend. In a joint statement early Monday, the companies said: “We are pleased to announce a renewed Viacom-AT&T contract that includes continued carriage of Viacom services across multiple AT&T platforms and products. [...]

  • Discovery CEO David Zaslav Sees 2018

    Discovery CEO David Zaslav Sees 2018 Compensation Soar to $129.4 Million

    Discovery Inc. president-CEO David Zaslav is once again making headlines for an enormous compensation package. Zaslav’s 2018 compensation soared to $129.44 million in 2018, fueled by stock options and grants awarded as the longtime Discovery chief signed a new employment contract last July that takes him through 2023 at the cable programming group. Zaslav received [...]

  • Jonathan Lamy RIAA

    Jonathan Lamy Stepping Down From RIAA

    Jonathan Lamy, the Recording Industry Association of America’s longtime executive VP of communications and marketing, is stepping down from his post after 17 years, he announced today. As he put it in an email to Variety, “I started back in 2002, which means it’s been 17+ years, four different RIAA CEOs, three format changes and [...]

  • Fox Layoffs

    Disney-21st Fox Layoffs: TV Divisions Brace for Deep Cuts

    A second day of layoffs has begun on the Fox lot in the wake of Disney completing its acquisition of 21st Century Fox on Wednesday. Longtime 20th Century Fox Television Distribution president Mark Kaner is among the senior executives who were formally notified with severance details on Friday morning. 21st Century Fox’s international TV sales [...]

  • anthony pellicano

    Hollywood Fixer Anthony Pellicano Released From Federal Prison

    Anthony Pellicano, the Hollywood private eye whose wiretapping case riveted the industry a decade ago, was released from a federal prison on Friday, a prison spokeswoman confirmed. Pellicano was sentenced in 2008 to 15 years, following his conviction on 78 charges of wiretapping, racketeering, conspiracy and wire fraud. He had been in custody since 2003, [...]

  • This image taken from the Twitter

    HBO’s Reaction to Trump’s ‘Game of Thrones’ Campaign

    Everyone wants a piece of the “Game of Thrones” lemon cake. From Bud Light to Red Bull the world of Westeros is open to a lot of brand partnerships, unless you’re using that iconic typeface to push a political agenda. In November of 2018 President Donald Trump unveiled a “Thrones” inspired poster with the words [...]

  • Leaving Neverland HBO

    'Leaving Neverland' Lawsuit Proves to Be a Judicial Hot Potato

    The Michael Jackson estate sued HBO last month for airing the documentary “Leaving Neverland,” which accuses the late King of Pop of serial child sexual abuse. Since then, the case has had a difficult time finding a judge to handle it. Three federal judges have recused themselves in the last week, citing potential financial conflicts [...]

More From Our Brands

Access exclusive content