Over-the-Top Video Complements Linear, At the Moment

Almost a third of urban consumers (31 percent) report they watch TV content using a computer, laptop, mobile device, tablet, or streamed directly from the Internet to the TV through an an Apple TV, a Vudu Box, an Xbox, or a Blu-Ray DVD player, according to Horowitz Associates.

Those who use alternative platforms for TV spend, on average, 15 percent of their viewing time on a platform other than traditional TV. This is in addition to time devoted to digital TV platforms such as DVRs and VOD.

Those findings probably make sense for most people who think about the matter. At this point, most people supplement linear video with over-the-top.

Separately, Nielsen data suggest that the alternative--dropping all linear video service in favor of online-only--remains quite rare. ESPN says there remains little evidence of consumer abandonment of multichannel video service, especially where it comes to sports programming. Analyzing Nielsen data, ESPN argues that Just 18/100ths of U.S. households “cut the cord” between fourth quarter 2010 and first quarter 2011. “Cord cutters” are defined as as multichannel users with a high-speed Internet connection that have dropped their cable/telco/satellite subscriptions, but retain their broadband connection to watch television. The current rate of 0.18 percent is less than the 0.28 percent found in ESPN’s previous analysis of cord-cutting from third to fourth Quarter 2010.

The amount of “cord-cutters” – multichannel homes with a high-speed Internet connection that drop their cable/telco/satellite subscriptions, but retain their broadband connection to watch television – netted out to only 0.11 percent of the television population over the past three months, according to an extensive ESPN analysis of Nielsen’s national people meter sample. The ESPN study provides a methodology for measuring and tracking cord cutting in the future, while debunking several stereotypes about the demographics of cord cutters.

The earlier ESPN analysis of Nielsen data found that just 0.28 percent of homes in the Nielsen sample dropped multichannel service but kept their broadband Internet connections. This migration was offset by a group of broadcast-only households that became subscribers to multichannel TV and broadband over the same period. These "un-cutters" represented 0.17 percent of homes in the Nielsen sample, so the net loss between the groups was just 0.11 percent of all households. Additionally, people who were heavy or medium sports viewers showed zero cord cutting. Heavy and medium sports viewers account for 83% of sports viewing and 90% of viewing to ESPN.  read more here.

The Cable & Telecommunications Association for Marketing argues that only 11 percent of the U.S. population currently watches "some TV shows and movies from the Internet on their TV sets." The vast majority of these Internet TV viewers (84%) say that they are still watching the same amount of traditional TV as before and have no plans to cancel their current cable subscriptions. read more here.

At least in aggregate, the number of users who dropped service altogether was almost exactly balanced by the number of consumers that bought multichannel video for the first time, or decided to subscribe again after an absence. These "un-cutters" also represented 0.18 percent of homes in the Nielsen sample, so the net loss between the groups was zero, ESPN argues.

Of course, there is a difference between current or immediately-past behavior and behavior as it might exist in the future. Almost nobody, if anyone at all, actually believes there will be anything but growth for over-the-top viewing, over time.

From ESPN's viewpoint, heavy or medium sports viewers showed zero cord cutting. Heavy and medium sports viewers account for 77 percent of sports viewing and 87 percent of viewing to ESPN. That makes sense. Live sports is one area of programming virtually none of the over-the-top providers can offer. To the extent that live sports is a major reason for watching linear video, there is little ability to shift viewing to online formats. The same is likely true of live news and live events that are for all sorts of reasons available only on broadcast and linear outlets.

Nielsen found that in households with people 25 years old or younger, 8.5 percent are cable-free, which is almost twice the national average. Younger people consider cable a “luxury item:” one that might be out of their budget right now, but would become an option once they grew older and could afford that extra $100 a month.

Horowitz Study Shows Online, Mobile, and OTT Platforms Gain Ground