Report: 22% of U.S. Broadband Homes Shun Linear TV

15 Mar, 2017 By: Erik Gruenwedel

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There’s a reason pay-TV operators are rushing online TV subscription services to market. New data from The Diffusion Group found 22% of broadband homes have shunned traditional pay-TV — up 144% from 2011.

TDG reported the number of broadband homes not subscribing to pay-TV has grown from 8 million in 2011 to 22 million at the end of last year.

“Wall Street and the media are myopically focused on the quarterly drip of pay-TV subscribers, which unfortunately overlooks a larger and more dangerous trend,” Michael Greeson, director of research, said in a statement. “Where broadband (and broadband video) goes, pay-TV subs will increasingly decline. This is indeed what has transpired.”

Greeson contends the extent of the disruption has been largely overlooked. Consequently, the vast majority of pay-TV operators are embracing online “skinny bundle” TV services to save their dual-service relationships despite the harm to average revenue per user. Comcast is the one exception to this rule, as it invested early in IP-enabled set-top X1 boxes and features, a strategy from which it has greatly benefited (and will continue to do so).

Unfortunately for other MVPDs, the stickiness of the Internet/TV bundle appears to be in decline, even before online TV services gain serious footing.

Indeed, Sling TV, the first online TV service launched two years ago, now buttresses Dish Network’s declining pay-TV subs. Comcast continues to embrace OTT video (Netflix, YouTube, etc.) within the X1 in an effort to thwart video declines. It seems to be working. The cabler added 161,000 video subs in 2016 — its best result in 10 years.

Yet, Comcast is readying an online TV service of its own. Speaking last December at an investor event, CFO Mike Cavanagh agreed pay-TV providers and ISPs are aggressively exploring launching alternatives online TV platforms such as Sling TV, PlayStation Vue and Charter Spectrum TV Plus.

“It's coming,” Cavanagh said.

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