Nielsen: Pay-TV Cord-Cutting is a ‘Myth’

There’s a growing belief that TV “cord cutting” – when consumers replace their pay-TV subscription in favor of online video services from providers like Netflix and Hulu – is gaining traction. In a (somewhat) surprising announcement, Nielsen says its new research “busts the myth” that mainstream consumers are turning to online solutions and abandoning cable subscriptions.

In fact, according to Nielsen, many consumers don’t see broadband as a replacement, but rather a complement to their existing pay-TV services. Nearly two-thirds of all U.S. households subscribed to both pay-TV and broadband as of January 2010, up from 61.6% in 2009 and 54.8% in 2008.

In comparison, broadband-only households have increased just slightly over the same two-year period, to 3.9% in 2010, up from 3.2% in 2008, and remained essentially flat during the past 12 months.

According to Howard Shimmel, SVP of client insights for Nielsen, shifting to online video mainly appears to be happening in niche markets that reflect a younger population of college graduates and lower- to middle-income consumers who may not be fully convinced of the need to pay for digital cable. However, Nielsen data shows that these individuals are typically light TV viewers who watch 40% less TV per day than the national average. And while they stream about twice the average amount of video, they still only stream about 10 minutes per day.

Other facts about online video viewing:

• The number of people per month viewing online video increased 6% year-over-year.
• There was a 9% increase year-over-year in the amount of time per month people spent online.
• Online video streaming still only accounts for less than 2.5% of total video consumption across all demographics.

Pay-TV providers would due well to remember that landline cord-cutting was often thought of in the same terms. Just a few years ago the phenomena was occurring only in small, niche markets — particularly younger, college-educated consumers, or who reported low to middle incomes. But in the past few years the trend has accelerated and mainstream consumers are increasingly turning to wireless-only voice solutions. Keep your eyes on on these twenty-something consumers and early-adopters as they often offer a glimpse into the future.

For more, see this Nielsen blog post, and read this New York Times article.

Related posts:

1. More on Video Cord Cutting
2. Cutting the Cable Cord
3. Nielsen: 48% of Americans Watch Online Video
4. New Nielsen DMA Rankings
5. Nielsen: Consumers Confused by Term ’4G’