Cord-cutting trend expected to nearly double broadband-only homes in U.S. over the next five years
Broadband households without legacy multichannel expected to hit over 40 million by 2023
MONTEREY, Calif.(29 Jan 2019)
Broadband-only households are set to grow from 23.3 million in 2018 to 40.8 million by 2023, according to estimates from Kagan, a media research group within S&P Global Market Intelligence.
"The steep upward trend of due to 'cord-cutting' is not surprising given the abundance of online video services on the market, although this could be a circular argument, with more companies jumping on the streaming video bandwagon in response to the growing broadband-only market," said Tony Lenoir, Senior Kagan Research Analyst at S&P Global Market Intelligence.
Kagan expects the segment of broadband homes without a traditional multichannel subscription to account for nearly one-third of U.S. households in the next five years.
Findings show that over-the-top (OTT) products, whether subscription video on demand, direct-to-consumer or virtual multichannel, are offered at competitive prices which is a major factor fueling cord-cutting in a context of affordability. Other reasons for the strong projection of broadband-only growth include the ease of joining and cancelling online streaming services. They typically do not require contracts.
Mr. Lenoir added, "The value proposition of streaming video services touches a chord with the average consumer. The vast majority of streaming services offer free trial periods, effectively allowing consumers to shop around while bypassing hardware hassles associated with legacy video distribution. This coupled with the fact that streaming services are typically screen-agnostic and seamlessly portable, offer individual, customized consumption for customers."
Additional takeaways from Kagan's broadband-only home outlook:
- Kagan expects broadband-only homes, or households without a traditional multichannel video package but a subscription to wireline broadband, to rise at an 11.9% compound annual growth rate from 2018 to 2023.
- Broadband-only homes are set to account for 41.7% of wireline broadband households by 2023. Kagan expects cable and telco broadband to serve nearly 75% of U.S. households by that time.
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