The differences between cord cutters and cord nevers is so pronounced that "any company targeting these consumers must think in terms of two distinct packaging and pricing strategies," an online video research firm says.
So says The Diffusion Group's Michael Greeson in an article by Telecompetitor that tries to dissect the current data about consumers who eschew pay-TV subscriptions in favor of over-the-top services.
Cord cutters, of course, are consumers who used to buy pay-TV services, but who opted for Internet-based video streaming at some point in the near past. Cord nevers, on the other hand, have never seen pay TV as an option.
TDG, in its new "Pay TV Refugees, 2014" report, noted that 14 percent of broadband households in the U.S. do not have a pay-TV subscription, a 6 percent rise from 2011.
Telecompetitor's Gary Kim points out that many current studies tend to either leave out cord nevers, or lump them in with cord cutters. For example, he cites a recent study that found 6.5 percent of U.S. households have cut the cord. But "those statistics do not include respondents who never have purchased a linear video service," he wrote.
Further, cord nevers tend to be younger, skewing toward the lower end of the 18 to 34 range, while cord cutters may skew older.
However, Kim says, current data doesn't answer some important questions about why younger consumers tend to be cord nevers. "(I)t actually is not clear whether the causation or correlation is with household size, parental status or income more so than with age."
Consumers' reasons for cutting the cord, or never having one, are varied enough that age alone can't be the only factor in deciding what a specific group wants. Yes, younger consumers make up the biggest part of the cord never group, but Kim argues that the reasons why they refuse to subscribe to cable or satellite TV haven't been fully explored. The cost of pay TV may be a big factor, but finding compelling content on linear services may be a bigger issue. And pay-TV providers may be able to attract cord cutters back into the fold, but can they--and should they--attempt to draw in cord nevers?
TDG's Greeson is fully aware of the need for more detailed data before providers make crucial content and strategy choices. "Minimizing damage and maximizing opportunity presupposes an understanding of who these consumers are, what drives their decisions, and what they expect from a pay-TV service, be it legacy or online," he said in a company release.
Finally, traditional broadcasters are about to leap into a whole new unknown with the cordless crowd: linear OTT.
"What is so far largely untested is whether an over the top linear programming service would be substantially more favorably received by 'cord never' households," Kim wrote.
Juenger: SVOD leading cause of 4 percent fall TV ratings drop
OTT households grow, while pay-TV consumers at their most miserable
Aereo, FilmOn hopes rise again as FCC moves to redefine MVPDs
Parks: Owning a TV isn't important to younger generation
Pay TV operators cater OTT to generation of cord nevers
Middle schoolers aren't charmed by Netflix