Forget cord-cutters, cord-nevers are pay-TV's real problem

Michelle Clancy | 28-11-2012

While the TV industry is consumed with discussing cord-cutters, some US broadband subscribers — mostly in the younger demographics — are opting out of pay-TV entirely, from the beginning.

These 'cord-nevers' are increasing in number and expected to double in the next five years, according to new research from the Diffusion Group.

"Today, 87% of broadband households currently subscribe to a pay-TV service, a decline of almost five percentage points since 2010, but nonetheless a very strong indicator of the grip that pay-TV has on US households," TDG noted. However, of the 17.2 million people that are expected not to have a cable, satellite or IPTV subscription by 2017, TDG forecasts that 40% (6.9 million) will be cord-nevers, up from 29% (3.2 million) this year.

The cord-nevers are a bit of a perfect storm. The younger, always-on generation is more fluent with Internet-based content and things like gaming consoles that can push OTT video to the television. They are comfortable with trolling the web for what they want to watch, and they're comfortable with on-demand viewing — the days of spending time around the TV as a family during primetime carries no nostalgic weight with them. And, they tend to spend more time online in general for entertainment rather than watch traditional TV. Finally, they are also be price-conscious, being students or young people starting out, making a pay-TV subscription a luxury they would be likely to do without.

In the period, the number of cord-nevers and cord-cutters combined will increase 58%, growing from 10.9 million in 2012, TDG said. That means that the percentage of broadband subscribers who are what the firm calls 'pay-TV refugees' will increase from 12.5% in 2012 to 17.2% of the US population in 2017.

When it comes to cord-cutters, the rationale for dropping a subscription, which can easily top $100 per month even in a triple-play, is fairly standard: it's too expensive. That was the number one response, according to VideoNuze, followed by a full 61% of respondents aged 18-24 who said they were turning to over-the-top (OTT) options like Amazon Prime and Netflix. 'Poor value' rounded out the responses.