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Cable Technology Feature Article

July 05, 2011

Only Three Percent of Television Consumers Have "Cut the Video Cord"

By Gary Kim, Contributing Editor

According to a new J.D. Power and Associates study, just three percent of pay-to-view television customers report having “cut the cord” and canceling their television service in favor of other viewing options. For multichannel video service providers, that’s good news. While viewing content on computers is growing, the television remains the central CE device for viewing television content.

Though it remains largely true that Americans are not rushing to cancel their subscription TV services, as a survey by the Consumer Electronics Association (News - Alert) suggests, it would not be true to say the phenomenon is not growing.

Through many recent surveys, ten percent of survey respondents say they are “very likely” or “likely” to cancel their linear video service and about 14 percent say they “might” do so.

CEA’s research suggests that 76 percent of U.S. consumers have no interest in cancelling their multichannel video TV service, with  51 percent reporting they are “very unlikely” to cancel TV service.

What is happening in the video entertainment space undoubtedly will follow the rather common pattern of most new significant innovations, namely that progress is very slow at first, underperforming expectations, while nearly always more significant in the long term, after the infection point is reached and the innovation takes hold.

About six percent of the millennial customers say they no longer subscribe to a residential television service, compared with only two percent of Baby Boomers. One percent of customers ages 66 to 86 report cancelling cable service, while four percent of Generation X customers say the same.

“The predictions of the demise of television subscription service as we know it are clearly premature,” said Frank Perazzini, director of telecommunications at J.D. Power and Associates. “The popularity of services such as Netflix and Redbox is a clear indication that consumers are enjoying the availability of alternative viewing options. However, with 52 percent of television customers reporting that they still watch regularly scheduled programming as it is broadcast, the current model will remain viable for the next two to three years, at a minimum.”

The signs of potential disruption continue to grow. The study also finds that more than one-fourth (27 percent) of video service customers indicate that they watch videos on a handheld mobile device, such as a music player, mobile phone or tablet. Mobile phones are still the most commonly utilized handheld mobile device for watching videos (15 percent), although with the surge in TV applications being developed for tablets, the use of these devices (currently 12 percent) could increase notably, the report suggests.

Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.