US TV: erosion, not implosion

TMT Predictions 2016

Executive summary

Deloitte Global predicts that the US traditional television market, the world’s largest at about $170 billion in 2016, may see erosion, but not implosion, on many fronts.

Pay-TV cord cutting. Deloitte Global predicts that the number of US subscribers who cut the cord (completely cancel pay-TV service from a cable, satellite or phone company) is likely to be just over one percent in 2016, perhaps 1.5 percent in 2017, and around two percent in 2018. By 2020, we predict that there are likely to be around 90 million US homes which are still paying for some version of the traditional bundle which, while down from the peak of 100.9 million subscribers in 2011, will be 18 million higher than the 72 million US cable and satellite subscribers in 1997.

Pay-TV penetration. Deloitte Global predicts that pay-TV penetration (or reach) will fall more than two percentage points to 81 percent in 2016, to under 79 percent in 2017, and around 70 percent by 2020. The expected decline in penetration rate is largely due to a steady 1.1-1.3 million forecast increase in the number of US households between 2015 and 2025. But another factor is the growing number of millennials (18-34 year olds) who have never had a pay-TV subscription. These are not cord cutters, but cord nevers, and in one US survey represent 11 percent of 18-34 year-olds.

Average monthly pay-TV bill. Deloitte Global predicts that the monthly TV bill in 2016 will be about five percent higher than the average $100 per month bill in 2015, or lower than the historical growth rate of over six percent, reflecting the combined effects of small numbers of cord shavers and fewer consumers adding channels.

Antenna instead of pay-TV. Deloitte Global predicts the number of antenna-only homes (or antenna plus Internet TV) to increase by less than one million in 2016, to about 13.5 million homes, and to about 18 million homes by 2020.

Average daily TV viewing, live and time-shifted. Deloitte Global predicts that daily TV minutes for the adult population will continue to fall at a slow but steady rate in 2016, to 320 minutes per day in Q1. On average, adults in the US watched over 330 minutes of traditional live and time-shifted TV per day in Q1 2015 on a TV set. This is 14 minutes down from 2014, and 10 minutes lower than in 2013.

Average daily TV viewing, live and time-shifted trailing millennials. Deloitte Global predicts that 18-24 year-olds will watch about 12 percent less traditional TV in Q1 of the 2016 broadcast year than in the same quarter of the previous year, or about 20 fewer minutes daily, down to an average of 150 minutes, still well over two hours. Deloitte Global further predicts that erosion in viewing time will continue, and that 18-24 year-olds will be watching less than two hours of TV daily by 2020, but more than 90 minutes. Younger Americans have always watched considerably less TV than older demographics, but the gap is widening: in 2008 18-24 year-olds watched 58 percent as much live and time-shifted TV as those over 65, while by 2015 that age group was watching only 36 percent as many minutes of live and time-shifted TV on TV sets, and about 42 percent as many minutes of all video on all devices as Americans 65+.

Although media coverage of these trends was very high in 2015, they have been ongoing since about 2010/2011, which in some ways was ‘peak TV’ in the US. With the rise of over-the-top (OTT) services offered from non-traditional providers like Netflix, download services like iTunes, clips from services like YouTube, and the continued usage of pirate sites (streamed or downloaded), talk of the imminent collapse of traditional TV of the traditional advertising and subscription-funded TV model is understandable. However, TV’s decline is more likely to happen at a slow, steady and predictable rate. An apocalypse is not around the corner.

US TV: erosion, not implosion

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