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Thursday, May 16, 2013

Does Zero TV Signal The Winds of Change for US Television?


For decades, some 2% of American households somehow managed to live without television. When people would ask who they were most of us in agency media departments would say the very poor, young people who had just moved in to a major city or perhaps a college professor who never saw the need for it. I vividly remember reading about a few TV-less families who checked in to hotels or motels back in 1969 to see Neil Armstrong and Buzz Aldrin walk on the moon! Finally, something important enough had occurred for them to want to watch TV.

Until 2007, the number stayed steady at about two million households or just under 2% of the U.S. household base. Well, things are changing. Nielsen, not some futuristic group, is now reporting that some five million U.S. households have no TV. This is quite a jump in six years as Smartphone sales have soared and online shopping continues to explode.

What is going on? It appears to be happening within a few distinct groups of people although thorough research has yet to be published. I have observed the following and confirmed it with a few other media observers:

1) Young professionals in major markets such as New York, Boston, Washington, DC and San Francisco. These people tended to graduate from elite schools and can afford anything. They have no interest in having a cable or satellite subscription. Most say that they get by with Hulu and Netflix streaming to cover their video needs. A few mentioned having Amazon.com as well. They lead very active lives and are the exact opposite of couch potatoes. Interestingly, billionaire investor and Revlon chief Ronald Perelman was on Squawk Box on CNBC recently. He talked of how Revlon has moved some of their TV and magazine dollars out onto digital platforms. Then he went on to say that a few of his eight children do not have television. They are fully engaged and in touch with pop culture but TV is not part of their very affluent lives.
2) Cheapskates, the frugal, and concerned adults. To some it comes down to dollars and cents. If you are spending $130-150 a month for cable/satellite, you are effectively spending $1500-$1800 a year for TV. Admittedly, internet, phone, and sometimes burglar alarms are often bundled with the TV bill. I have read and spoken to many people who say that with Hulu+, Netflix and an Amazon.com subscription plus the occasional film on You Tube, they save a bundle and their needs are covered. Many watch DVD’s, videos, and Internet video on their otherwise unused TV sets. Included in this group are a handful who feel that they watch too much TV and canceling their service is the right thing to do. They catch up with HBO shows a year later when Netflix has them and say that the savings are worth the wait.
3) The final group is older and struggling big time financially. With social security the bulk of their income, cable/satellite has become prohibitively expensive. I ran in to more than one such person at my local library fishing for vintage British videos that even Netflix did not have. One lady told me she uses the library’s free videos, and uses her grandson’s laptop to cover other viewing needs. She watches Masterpiece Theatre a day late on line and has yet to miss an episode of her beloved “Downton Abbey.” The Weather Channel online is also “more accurate than those local guys I used to watch.”

So, something is happening out there. This past month Comcast reported that 70,000 households had cut the cable cord with them in the last quarter but that was more than made up for revenue wise by people adding phone service or internet. They also are now serious content providers with NBC/Universal. Time Warner talked of making their product available away from home on a variety of devices and ABC Network announced a plan going in a similar direction. This is especially wise for ABC with conventional networks having an average audience age in primetime over 50 years old.

Another straw in the wind is with Netflix. There seems to be more buzz about Netflix bringing back “Arrested Development” on May 26th than there is about the networks fall lineups that are being announced.

It makes me wonder what will happen if this trend snowballs. Many have asked for a la carte billing of cable channels but, without packaging, many smaller networks would go under. ESPN would thrive as many people say sports is why they continue to keep cable or satellite.

Also, the Netflix and Hulu strength has to bother broadcasters and cable providers. Will that relationship have to change if Zero TV households take off soon? Clearly, most people will not give up TV unless their finances get desperate. Yet, the group to watch are the young upscales. If they hit 30 years old and are getting by just fine thank you with no TV, there could be a huge problem ahead. Newspapers could not get enough yuppies and hold them 20 years back and are now suffering the consequences.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

2 comments:

  1. Zero TV doesn't mean no TV. 75% of those homes, per Nielsen, still have at least one TV, they're just watching content online, not throwing money away on cable. Many are streaming content through their tvs, either through their laptop, streamers, like the Sookbox (sookbox.com), or with Smart TVs.

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    1. Fair enough. My point is that some people are doing without cable or satellite. Whether is grows faster will be interesting to watch and effect the advertising model.

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