You don’t have to look far these days for news on cord-cutting. According to a report out this week from Leichtman Research Group the largest U.S. pay-TV providers lost a combined 795,000 subscribers in 2016. According to a report out last week from TiVo the share of cord-cutters who have dropped service within the previous year reached 19.8 percent in the fourth quarter, the highest ever registered, suggesting the phenomenon is accelerating.
In yet another report released this week, The Diffusion Group turned the telescope around and looked not at how many pay-TV households have dropped their service but at the number of U.S. broadband households that are going without pay-TV service. If anything, the view was even worse for the pay-TV industry.
According to TDG’s survey, 22 percent of the 100 million households that subscribe to broadband — some 22 million homes — do not have pay-TV service. That’s up from 9 percent of the 85 million broadband subscribers in 2011, or 8 million households, and up from 18 percent just since the beginning of 2016.
“Wall Street and the media are myopically focused on the quarterly drip of legacy pay-TV subscribers, which unfortunately overlooks a larger and more dangerous trend,” TDG director of research and co-founder Michael Greeson said in a statement released with the report. “As TDG noted long ago, where broadband (and broadband video) goes, legacy pay-TV subscriptions will increasingly decline. This is indeed what has transpired.”
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TDG calls those 22 million households “cord nils,” which encompasses both cord-cutters (17 million) and cord-nevers (5 million). And in the view of the TDG researchers, they’re not coming back. Just 8 percent said they are moderately or highly likely to sign up for pay-TV service in the next 6 months.
As with other studies, the biggest factor driving the cord-nils out of the traditional pay-TV fold is cost, cited by 68 percent of cord-cutters and 65 percent of nevers, although an equal 68 percent of cord-cutters also cited satisfaction with the streaming services that most of them subscribe to as a factor.
Overall, 83 percent of cord-nils subscribe to one or more streaming video service, led by Netflix, at 69 percent. Notably, though, the most widely used source of TV programming among the nils, cited by 66 percent, is DVDs and Blu-ray discs, followed by streaming and over-the-air channels, at 58 percent each. The survey didn’t ask, or at least TDG didn’t report, how many cord-nil households engage in unauthorized streaming of pay-TV content, although it’s probably not zero.
What both reliance on DVDs and Blu-ray discs and streaming services offer cord-nil households is a measure of control — the ability to calibrate what you pay with what you’re actually watching, something the traditional pay-TV bundle was designed specifically to deny to users. How much longer the pay-TV providers can continue to deny users that control before the incoming tide of cord-nils becomes a flood is the most important question confronting the industry.