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7 January 2016

Broadband and OTT hot, pay TV not says Pew

By Charles Hall

The recent “Home Broadband 2015” study published by Pew Research reported what we all expected in its look at the US home broadband arena.

Home broadband adoption is at 67% of Americans in 2015, down slightly from 70% in 2013 while smartphone-only broadband access is up to 13% in 2015, from 8% in 2013. In all though, 80% of US adults have either home or phone broadband access in 2015, up slightly from 2013.

Despite the decrease in home broadband subscribers and increase in mobile broadband subscribers, people prefer to use their smartphones for staying connected with friends and family. People prefer devices that connect to home broadband for watching video, according to Pew Research Center senior researcher, John Horrigan. This may be obvious but it is important to keep in mind because of the rise in cord-cutters and cord-nevers.

The “Home Broadband 2015” report revealed that 15% of US adults abandoned cable and satellite TV services, becoming cord-cutters while 9% of US adults admitted to having never subscribed to a cable or satellite service. That means that in 2015 nearly one-quarter (24%) of all American adults don’t subscribe to pay TV services. That is a large piece of the pie no matter how you cut it and just as expected, OTT video services (and the lower costs that go along with them) are contributing to the amount of pie that is missing from pay TV services. Of the respondents that don’t have pay TV, 71% cited the high cost of cable and satellite as a reason for not subscribing and 64% cited the ability to access content online or via antenna as a reason for skipping on pay TV. Streaming services like Netflix, Hulu and Amazon Prime Instant Video are available for relatively low costs and they provide the option for consumers to watch the content they want when they want to on the devices of their choosing.

The same can’t be said of pay TV, although it is trying. TV Everywhere options are indeed everywhere now, service providers and TV networks are giving viewers the option to view live TV online although the linear aspect of traditional pay TV still exists for some – not to mention subscribing to multiple TVE options makes for a less-than-friendly user experience for the consumer who has to jump from one option to the next while browsing for something to watch.

But, traditional TV services are far from dead with 100 million homes still subscribing in the US in 2015, down by one million homes from 2014. If the trend away from pay TV continues though, it will be trouble and all signs point straight to that conclusion as young adults are the most likely cord-cutters. Among young adults between the ages of 18 and 29 only 65% have cable or satellite subscriptions. In the “Home Broadband 2015” report, among the adults surveyed between 18 and 29 years old 19% had cancelled their cable or satellite subscription in 2015 and another 16% were cord-nevers.

The report from Pew Research echoes what we have been saying over and over, pay TV is in danger, not eminent danger but danger none the less. The Millennials are adults now and are straying from cable and satellite services in favor of OTT video services and they aren’t the only ones.

This first ran in Rider Research’s Online Reporter.