nScreenMedia OTT multiscreen media analysis

Millennials discover the joy of free-to-air TV

antenna aerial TV

In my opinion yesterday I talked about how traditional TV broadcasters are shying away from providing their best and most recent content online for free. New data shows that increasing numbers of consumers are returning to free-to-air TV watch their shows for free.

US homes without pay TVGfK released data from a recent survey of 3,009 US consumers showing that 25% of US consumers do not pay for pay TV. 10% have never had service and 12% had service, but have gotten rid of it. 3% weren’t sure if they had pay TV before, but were sure they no longer do.

Overall, money remains the determining factor in cancelling cable. 72% of those that cancelled say it was to save money, and half say pay TV doesn’t offer enough value. Income levels among those without pay TV are substantially lower than the average. GfK says average income for cord-cutters is $59,000 and for cord-nevers is $47,000. Average income for the total population in the survey is $65,000.

With SVOD penetration exceeding 50%, the allure of SVOD is clearly becoming aSVOD reason for cancelling pay TV bigger factor. GfK found the number saying the ability to watch online increased 12 points from 2014, to reach 28%. The company says 6% of TV homes now rely exclusively on SVOD services like Netflix, Hulu and Amazon for their television.

There is another siren drawing pay TV subscribers away from the service: free-to-air TV. However, the number of consumers actually using it appears to be in debate. GfK claims that 17% of US TV households rely on broadcast TV only. This is a big increase from 2015, when 15% said this. Nielsen says there were 116.4 TV households in 2015. Combining this with GfK’s numbers implies there are nearly 20M households that rely on free-to-air TV.

Nielsen and GfK do not agree at all on the number of free-to-air homes. Nielsen says the number of broadcast only homes increased 700,000 during 2015, to reach 13.3M in Q1 2016. That’s an increase of 6.5% over the same quarter in 2015. 6M of those broadcast TV homes do not have broadband access. 7.3M are combining broadcast TV with broadband.

US TV homes relying on free-to-air TV13.3M20M
Penetration of TV homes11.4%17%
Increase over previous year6.5%13%

Millennials are much more likely than the rest of population to opt for alternatives to pay TV. GfK says 38% of TV homes with someone between 18 and 34 years-old do not subscribe to cable, satellite or telco TV. 22% of these homes are using broadcast-only reception, versus 17% for all homes. This is remarkable when you consider that many millennials grew up in homes that never relied on an aerial for their television reception.  Less surprising is the increased reliance on SVOD services. 13% only use Internet sources for their video versus 6% for all TV homes.

Though pay TV is doing a good job dissuading people from cutting the cord, those that do break free are finding cheap, quality sources of TV entertainment that are readily available. As pay TV costs continue to mount we can expect many more to join them.

Why it matters

Cord-cutting is still driven primarily by people looking for cheaper sources of entertainment.

SVOD sources are increasingly viewed as cheap alternatives to the big-cable-bundle.

Free-to-air is being rediscovered as a valuable source of entertainment, even by the millennials with little experience of using it.


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