(Because of the huge price difference between what you get from cable and what you can get from the Internet, millions of consumers have become “cord cutters,” cancelling cable and relying entirely on the Internet.
Nearly half of adults stream
Experian Marketing Services has released an analysis of how consumers are accessing video content. It found that 48% of all U.S. adults and 67% of young adults watch streaming or downloaded video during a typical week.
And they aren't always sitting at their desks when they're doing it. Mobile is the preferred screen for watching, streaming or downloading video, with 24% of all U.S. adults and 42% of smartphone owners watching downloaded video each week.
Of growing concern to cable giants like Comcast and Time Warner, more consumers are becoming cord cutters every year. According to Experian, an estimated 7.6 million U.S. homes today are considered cord-cutters, up from 5.1 million homes in 2010, a relative increase of 44%. Consumers who subscribe to Netflix and Hulu are the most likely to be cord-cutters.
Changing definition of television
"While we are seeing the way we view video drastically changing, television is likely to remain the primary device for consumer video; we just are witnessing the transition of the definition of television," said John Fetto, senior analyst, marketing and research, Experian Marketing Services.
Helping the trend along is the fact that a third of U.S. consumers live in households with Internet-connected TVs. That allows them to watch streaming content on their TV sets.
Low-cost content providers like Netflix got the balling rolling but hardware makers have helped too. Apple's iPad and Amazon's Kindle Fire give consumers a way to watch video content at home or on the go.
Apple also makes Apple TV, a small network device designed to play digital content from iTunes, Netflix, Hulu Plus, YouTube and Vevo. Google developed Chromecast, a media player displaying video content on an HD TV by streaming it from the web.
Amazon recently unveiled Fire TV, a network device featuring 2 GB of RAM, dual-band Wi-Fi and a Bluetooth remote with microphone for voice search. The company says Fire TV allows faster streaming than its older competitors.
Life without cable
It's true that getting rid of cable or satellite TV will save money, but can you really exist on just what's available online? It all depends on how much TV you consume.
If you live in an urban area you can probably receive over-the-air broadcast stations – usually in HD – allowing you to receive network TV for free. That should satisfy the need for news and some live sports.
A website, CordCutterGuide.com, offers advice and support for consumers on selecting and installing a TV antenna. It also has a guide to viewing live sports online.
Sports offerings online are modest compared to cable but they do exist. ESPN3 streams some live games not available on its cable channels, for example.
Unstoppable trend?
With more people leaving cable and doing their viewing online, it's hard to imagine that, in the future, content providers won't increase their online offerings, even if they have to impose a small charge. That could set up conflict with their large cable outlets.
"While the growing trend in cord-cutting is understandably disturbing to cable and satellite companies and disruptive to the television advertising revenue model overall, the growth in online viewing creates opportunities for marketers," said Fetto.
Perhaps even a better opportunity than cable provides. Fetto says it's easier to target online video viewers and serve up advertising that is more relevant, responsive and – this is important -- measeureable.
With DVRs, cable subscribers typically time-shift their viewing and fast-forward through commercials. Marketers can be more confident that their online ad is being seen given that streaming viewers typically are unable to skip ads.
