U.S. broadband homes without pay TV have more than doubled since 2011 to 22%, report says

Cord-cutting has generally been acknowledged as a very real threat to the traditional pay-TV business, but operators have underestimated the impact.

The percentage of U.S. homes with broadband but not pay TV has more than doubled in the last five years, according to research company The Diffusion Group.

In its latest report, “Life Without Legacy Pay-TV: A Profile of U.S. Cord Cutters and Cord Nevers,” Diffusion said 9% of the 85 million U.S. broadband-equipped homes reported being cord “nils” in 2011—that is, having little or no usage of traditional cable, satellite or telco TV platforms.

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Today, the cord nil percentage stands at 22% according to the research group.

“Wall Street and the media are myopically focused on the quarterly drip of legacy pay-TV subscribers, which unfortunately overlooks a larger and more dangerous trend,” said Michael Greeson, TDG co-founder and director of research, in a statement hawking the report. “As TDG noted long ago, where broadband (and broadband video) goes, legacy pay-TV subscriptions will increasingly decline. This is indeed what has transpired.”

While cord-cutting has generally been acknowledged as a very real threat to the traditional pay-TV business, Greeson said, operators have underestimated the impact. They’re now cratering their ARPU as they respond with cheaper “skinny” program packages to try to save their “dual-service relationships.”

Traditional U.S. pay-TV platforms lost 319,000 subscribers in the U.S., according to an estimate made by MoffettNathanson analyst Craig Moffett.

Moffett’s estimate compared to a gain of 48,000 subscribers in the fourth quarter of 2015.

“With the results now in from all of the largest operators, it is clear that cord-cutting of legacy distribution services—that is, without including OTT-delivered virtual MVPD bundles like Sling TV and DirecTV Now (and soon, YouTube TV)—has at last meaningfully accelerated,” Moffett said in a report issued last month. “While there admittedly remain a few smaller operators left to report, the pay-TV business (as defined by traditional providers) ended 2016 shrinking at 1.7% per year, its fastest quarterly acceleration on record.”

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