According to a report from analyst firm The Diffusion Group, the proportion of US broadband households not subscribing to a Legacy Pay-TV (LPTV) service has more than doubled in the past five years.
In 2011, 9 per cent of the 85 million US broadband households qualified as Cord Nils (literally, ‘zero’ use of TV services from cable, satellite, or telco-TV providers). At year-end 2016, the number of US broadband households topped 100 million, with 22 per cent qualifying as Cord Nils. In other words, the number of broadband households living without Legacy Pay-TV has grown from just under eight million in 2011 to 22 million by year-end 2016.
“Wall Street and the media are myopically focused on the quarterly drip of Legacy Pay-TV subscribers, which unfortunately overlooks a larger and more dangerous trend,” notes Michael Greeson, TDG Co-Founder and Director of Research. “As TDG noted long ago, where broadband (and broadband video) goes, Legacy Pay-TV subscriptions will increasingly decline. This is indeed what has transpired.”
While this should not be ‘news’ to legacy operators, Greeson argues that the extent of the disruption has been largely overlooked. Consequently, the vast majority of MVPDs are being forced to rely on ARPU-killing ‘skinny’ TV services to save their dual-service relationships. Comcast is the one exception to this rule, as it invested early in IP-enabled set-top boxes and features; a strategy from which it has greatly benefited (and will continue to do so). Unfortunately for other US MVPDs, the stickiness of the Internet/TV bundle appears to be in decline, even before Broadband Pay-TV services gain serious footing.