LInear TV Continues to Slowly Erode

LInear TV subscribers continue to drift slowly away, with the big current problem being potential new subscribers forming new households. In other words, current subscribers slowly are abandoning the service, while significant numbers of potential new customers are choosing not to buy at all.

Some 83 percent of all households nationwide subscribe to some form of linear TV service, according to Leichtman Research Group (LRG).

The percentage of households that subscribe to linear TV services is down from 87 percent in 2010, though up from 81 percent in 2005, LRG says. That suggests adoption has climbed.

Were the number of U.S. households stable, that would be the case. But households have grown by more than 4.5 million units. So the percentage of households buying service has dropped.

The declines come principally from two trends. Current subscribers are dropping service, while new households being formed by younger consumers are refusing to buy the product.

Just about every metric suggests weaker demand from current buyers, and much lower demand from potential new buyers.

Among TV households that do not currently subscribe to a pay-TV service, 17 percent paid for a service in the past year, while 70 percent of non-subscribers last subscribed over three years ago, or never subscribed to a pay-TV service.

Overall, about 2.5 percent of TV households paid to subscribe to a service in the past year, but currently do not, compared to 1.5 percent in 2010, and 2.3 percent in 2005.

In households using a TV, 12 percent of homeowners do not subscribe to a linear subscription TV service, compared to 23 percent of renters.

Some 21 percent  of those who moved in the past year do not currently subscribe to a linear video service, compared to 12 percent in 2010.

Fully 63 percent of non-subscribers buy a subscription video on-demand service.

Some five percent of all households are linear service  non-subscribers, with both an SVOD service and an over-the-air  antenna.

Some four percent of all households are linear TV non-subscribers, but do buy a Netflix style service and do not use an over-the-air antenna.

"Historically, consumers have gone in and out of the pay-TV category, primarily for economic reasons,” said Leichtman. “While the rate of those leaving is actually similar to a decade ago, those who are entering or reentering the market has decreased over time, and the industry is not keeping pace with rental housing growth."
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