US broadband subs overtake pay-TV customers for first time
| 29 October 2014
While residential broadband penetration will soon top 100 million US households, legacy pay-TV subscription services have peaked and are in decline.
According to research firm 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.
TDG's latest report, Pay-TV Refugees 2014, found that 14% of adult broadband users don't have a legacy pay-TV service, such as cable. This figure is up from 9% in 2011, the beginning of a 36-month period during which home pay-TV subscriptions began to decline.
"Today, residential broadband services are used in 75 percent of US households, meaning 13 million broadband households are currently doing without a traditional pay-TV service," noted Michael Greeson, TDG president and author of the report.
While media companies, streaming giants, pay-TV and start-ups alike are going after the opportunity, Greeson cautioned that "minimising damage and maximising 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."
He added that there are two distinct sub-segments at play in the market: cord-cutters and cord-nevers. Both exhibit 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," the report noted.