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A recent report from Experian has concluded that some 7.6 million U.S. households, or 6.5 percent of the total, cancelled their pay TV service from cable or satellite providers, and that as many as a third of those have opted instead for Internet TV "over-the-top" (OTT) services from providers such as Apple TV and Roku.
Cord-cutting on the rise - Netflix, Hulu users biggest cord-cutters
An estimated 6.5% of U.S. households (7.6 million homes) today are considered “cord-cutters,” meaning they have high speed Internet but no cable or satellite television service. That’s up from 4.5% of households (5.1 million homes) in 2010, a relative increase of 44%. While the term cord-cutter implies that a household had a cable or satellite TV subscription that was cancelled, young adults starting out on their own for the first time may never pay for TV service. In fact, 12.4% of households inhabited by an adult under the age of 35 (almost twice the national average) are cord-cutters. Throw either a Netflix of Hulu account into the mix and the share of young adult households that don’t pay for TV jumps to 24.3%.
"Cord-cutting used to be an urban myth. It isn't anymore. No, the numbers aren't huge, but they are statistically significant." CRAIG MOFFETT, MOFFETT RESEARCHSmartphone and digital tablet ownership—especially iPhones and iPads—also noticeably increases the odds that a household is a cord-cutter. Specifically, households where at least one resident owns a smartphone are 20% more likely to be cord-cutters and households where someone owns a tablet are 36% more likely. Compare those baselines to the fact that iPhone-owning households are 33% more likely to be cord-cutters and households with an iPad are 65% more likely.
Not everyone agrees with the numbers of course, Fierce Enterprise published a critique from veteran entertainment and broadband media analyst Bruce Leichtman (former director of marketing for Continental Cablevision), principal with Leichtman Research Group which claims the numbers are not correct:
"This massive cord-cutting never really happened," states Leichtman in an interview with Fierce. "Because it never happened to the degree that many predicted-slash-hoped for, we have thus redefined what cord-cutting is."
"What cord-cutting was supposed to be five years ago," Leichtman continues, "was somebody who disconnected their pay TV service because of what's available online. It never really happened to a large degree." He then pointed to a survey of Canadian households by Convergence Consulting earlier this month, which reached the same implication about the data it collected.
Timothy Stenovic from Huffington Post disagrees:
And who can blame them? TV is pricey. The average cable TV bill, not including fees, promotions or taxes, has increased by a whopping 97 percent over the past 14 years, according to the media research firm SNL Kagan. That bill could reach a whopping$200 per month by 2020, one study found.
That could spell trouble for cable companies like Comcast and Charter down the line.
"The young millennials who are just getting started on their own may never pay for television," said John Fetto, a senior analyst at Experian Marketing Services. "Pay TV is definitely declining."