12.5% of US Broadband Homes Don’t Have Pay TV

12.5% of US Broadband Homes Don’t Have Pay TV
By Charles Hall, once a cord cutter but now returned to the

Non-pay TV households now account for 12.5% of US broadband
subscribing residences in the US, according to a new report by
TDG — that’s of those that have broadband. That’s about 11
million. It said that in general pay TV subscriptions remain
flat to slightly negative, but an increasing number of
broadband households are doing without the monthly pay TV

The report, called “PayTV Refugees: A Primary Profile of Cord
Cutters and Cord Nevers,” details this small but seemingly
growing segment.

TDG founding partner and research director Michael Greeson
said the percent of broadband households doing without pay TV
has increased from 9.5% in late 2010, to 11.2% in late 2011,
to 12.5% today. “Though pay TV operators rightly argue that
OTT’s impact on basic pay TV subscriptions has been
negligible, when one focuses exclusively on broadband
subscribers — those most likely to have access to OTT services
– the numbers tell a different story,” he said.

In the report, TDG classifies non pay TV subscribers into two
– Cord Cutters are broadband users that once subscribed to
pay-TV but no longer do.
– Cord Nevers are broadband users that have never subscribed
to pay-TV.

TDG said the two have radically different profiles.
– Cord cutters are a bit older, enjoy higher annual incomes,
and are more likely to have children under 18 living in the
– Cord nevers are younger — a third are between the ages of 18
and 24. More than half have annual incomes under $30,000 and
only 20% have children under 18 living in the home.

TDG expects both segments to increase over the next five

Percentage of US broadband homes

without a subscriptionLate 2010 9.50%Late 2011 11.20%Late
2012 12.50%The key word is broadband because the numbers do
not consider non-broadband subscribers.Late 2013Want to take a
guess? TDG says it will keep climbing.
It warns that cord nevers are the most immediate challenge for
pay-TV operators. Their knowledge of technology and “gadgets”
is greater, especially when it comes to entertainment. They
grew up in a world of Net-connected screens and online
services like Netflix and Hulu. They are fully aware of the
existence and costs of pay TV services and understand the
benefits and limitations of the online alternatives.

Greeson said, “Imagine you were a 20-year old struggling to
find a job, much less ‘the’ job, moving out on your own and
for the first time faced with paying your own bills. Spending
$80-$100 per month for a pay TV service, though enjoyable, is
more of a luxury than a necessity. And by combining free over-
the-air broadcasts with a couple of $8 per month OTT
subscriptions and free online video, they can easily create an
imperfect but sufficient substitution solution. And many

The report has demographic and behavioral profiles of both
segments. It forecasts for pay-TV and home broadband
subscriptions, as well as the growth of Pay-TV Refugees
through 2017.

About the Author

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