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Pay-TV sub numbers fall behind broadband expansion

TDG

TDG

While residential broadband penetration will soon top 100 million US households, legacy pay-TV subscription services have peaked and are in decline.

According to The Diffusion Group (TDG), during the next few months, and for the first time in history, the number of home broadband subscriptions will surpass the number of home pay-TV subscriptions.

While asserting a casual relationship between these two trends still fuels debate, the correlation is indubitable. According to TDG’s latest report, Pay-TV Refugees, 2014, 14% of adult broadband users do not use a legacy pay-TV service, up from 9% in 2011, the 36-month period during which home pay-TV subscriptions began to declin

“Today, residential broadband services are used in 75% of US households, meaning 13 million broadband households are currently doing without a traditional pay-TV service,” notes Michael Greeson, TDG President and author of the new report.

While these consumers pose an obvious and growing challenge for incumbents, they provide an excellent opportunity for new video purveyors, whether pure-play online ventures like Netflix or the growing list of television networks going direct-to-consumer. However, as Greeson notes, “Minimizing damage and maximizing opportunity presupposes an understanding of who these consumers are, what drives their decisions, and what they expect from a pay-TV service, be it legacy or online.”

Pay-TV Refugees are comprised of two distinct sub-segments, Cord Cutters and Cord Nevers, each exhibiting widely varying demographic and video-viewing characteristics. The differences are so pronounced that any company targeting these consumers must think in terms of two distinct packaging and pricing strategies.

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