'Pay TV refugees' seen populating 13% of U.S. broadband households

TDG reports 11 million residences don’t subscribe to MVPD services
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There are 11 million broadband households in the United States comprised of cord cutters and cord nevers who do not subscribe to pay TV services. This group, lumped together as "pay TV refugees," now makes up about 13 percent of the entire U.S. broadband household universe, The Diffusion Group (TDG) says in its report, "Pay TV Refugees: A Primary Profile of Cord Cutters and Cord Nevers."

The percentage of pay TV refugees has climbed since late 2010, when about 9.5 percent of the broadband population avoided pay TV, to 11.2 percent in late 2011 and 12.5 percent today, the research firm said.

"Though pay TV operators rightly argue that OTT's impact on basic video subscriptions has been negligible, when one focuses exclusively on broadband subscribers--those most likely to have access to OTT services--the numbers tell a different story," said Michael Greeson, TDG founding partner and research director, in a news release.

TDG sees the broadband world as comprised of pay TV subscribers, cord cutters who once subscribed to pay TV but dropped those subscriptions and cord nevers who never even subscribed to service in the first place. All those groups subscribe to broadband; the last two avoid TV.

Cord cutters, TDG continued, "are a bit older, enjoy higher annual incomes and are more likely to have children under 18 living at home." More than half of cord nevers, almost a third of whom are between the ages of 18 and 25, "have annual incomes under $30,000 and only one-fifth have children under 18 living in the home," the report said.

Both groups are expected to grow in size in coming years following the "fairly straightforward" logic that the world in which they consume video has changed, Greeson said. They understand how to get content without following a traditional pay TV pattern.

"Imagine you were a 20-year-old struggling to find a job (much less 'the' job), moving out on your own and for the first time faced with paying your own bills. Spending $80 to $100 per month for a pay TV service, though enjoyable, is more of a luxury than a necessity," Greeson said.

On the other hand, "by combining free over-the-air broadcasts with a couple of $8 a month OTT subscriptions and [watching] free online OTT video, they can easily create an imperfect but sufficient substitution solution. And many will," he concluded.

For more:
- TDG issued this press release

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