Kagan forecasts big growth in the number of homes with broadband, but without multi-channel television. Two dominant factors are fueling this massive growth: OTA and SVOD.
Chapter 1: Kagan forecast for growth in broadband homes without multi-channel TV (0:20)
Kagan forecasts that the number of U.S. households with broadband but without multi-channel television will increase from 19 million in 2017 to 37.2 million in 2022. Household penetration will grow from 15.5% in 2017 to 29.2% in 2022.
Kagan’s data implies that there will be 5 million new homes formed over the next five years. Accounting for these new households means that 13 million homes that have pay TV today will not have it five years from now.
Two broad factors enable the move to leave pay TV behind.
Chapter 2: Growth in over-the-air television a big factor (1:50)
Nielsen data shows that there has been a big increase in the number of homes using over-the-air television. In Q2 2015 there were 12.7 million OTA homes. Two years later, the number has swelled to 15.8 million. Almost all of the growth is in the number of homes that combine OTA with broadband content. Those homes have grown from 6.7 million to 9.4 million over the same period.
Assuming similar growth rates and market dynamics remain in effect for the next five years, thee will be between 20 to 25 million broadband plus OTA homes in 2022.
Many people cut-the-cord assuming they can get by with just broadband content. However, getting access to local sports and big events remains challenging online. Adding OTA solves this problem.
Chapter 3: SVOD is a big factor (4:25)
LENDEDU, a personal finance website, says that people cutting the cord say they save, on average, $115 per month. Understandably, 58% of cord-cutters said that cost was a big factor in their decision to leave, while only 21% said SVOD was. However, 72% used SVOD before cutting the cord and had an average of 2.8 streaming services when they cut. They said they spent around $35 a month on services after they left pay TV behind.
More disturbing for pay TV is the fact that 80% of their customers have SVOD services, and 48% say they use SVOD as much as or more than their multi-channel television subscription.