Rise of broadband-only households

In a quest to “piece together” their entertainment experience from a growing variety of options, a significant proportion of US households are “going solo” by subscribing to home internet only. Deloitte’s latest Digital media trends survey shows that about a third of US households now have a “single play” subscription. Changes in viewing behavior and availability of high-quality, streamed video content are likely driving this trend.

The proportion of US broadband-only households (those who don’t have pay TV) rose to 31 percent in 2018—a compound annual growth rate of 13 percent over four years.¹ More than a third of these households include millennials, and about half have an annual income below $50,000. Yet, when it comes to paid streaming, they subscribe to more services than bundled households.²

The rapid rise of streaming video services has helped fuel the growth of broadband-only households. About 80 percent of these households subscribe to a streaming video service—much higher than the average across all US households.³ This trend, combined with their preference for original content, appears to be moving these consumers away from traditional pay-TV bundles.

Our analysis shows that broadband-only households represent a lucrative market for streaming companies. Not only do they stream more often—they also have a higher propensity to pay for it. US broadband-only households typically watch 19 hours of streaming video per week—almost twice the amount for bundled households (11 hours). What’s more, broadband-only households devote more than half of their streaming time (52 percent) to paid services, compared with just 44 percent of bundled households.⁴

Because many consumers are keeping their home internet after cutting the pay-TV cord, home internet service providers will likely hold the key to home entertainment consumer relationships. For this reason, few internet service providers are rebranding themselves from multichannel video programming distributors to high-speed broadband providers. Since home broadband is a higher-margin segment compared with video, few providers are even encouraging their subscribers to opt out of video service.⁵

As more media companies launch their streaming services, the importance of home internet will grow further. This will likely increase competition in the segment and more options for the consumers. The future of video distribution might see high-speed broadband at its core, supplemented by over-the-top bundles.

This charticle authored by Shashank Srivastava on June 5, 2019.

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Endnotes

¹ Deloitte,“Digital media trends Survey, 13^th edition,” March 2019.
² Ibid.
³ Ibid.
⁴ Ibid.
⁵ Alex Sherman, “The future of cable may be no TV at all,” CNBC, March 3, 2019.