Skip to main content

Ongoing Fragmentation of U.S. Video Entertainment

What happened to the legacy video entertainment market in America, and why has HBO announced that they will -- for the first time -- choose to bypass the traditional pay-TV distribution channel to reach new customers?

While residential broadband internet access will soon reach 100 million households in the U.S. market, legacy pay-TV subscription services have already peaked and are in a slow decline.

According to the latest market study by The Diffusion Group (TDG), during the next few months, and for the first time in history, the number of home broadband subscriptions will surpass the number of home pay-TV subscriptions.

In September 2014, TDG surveyed 500 adult broadband users that did not subscribe to a traditional home pay-TV service -- such as those offered by cable, satellite or telco network operators.

Based upon the TDG market assessment, they uncovered that 14 percent of adult broadband users do not use a legacy pay-TV service -- that's up from 9 percent in 2011, the 36-month period during which home pay-TV subscriptions began to decline.


"Today, residential broadband services are used in 75 percent of U.S. households, meaning 13 million broadband households are currently doing without a traditional pay-TV service," said Michael Greeson, president and director of research at TDG.

TDG believes that while these consumers pose an obvious and growing challenge for incumbent pay-TV service providers, they provide an excellent opportunity for new video purveyors, whether pure-play online ventures like Netflix or the growing list of television networks going direct-to-consumer.

However, as Greeson notes, "Minimizing damage and maximizing opportunity presupposes an understanding of who these consumers are, what drives their decisions, and what they expect from a pay-TV service, be it legacy or online."

TDG calls this growing untapped customer segment "Pay-TV Refugees" -- they're comprised of two distinct sub-segments, Cord Cutters and Cord Nevers, each exhibiting widely varying demographic and video-viewing characteristics.

The differences, according to Greeson, are so pronounced that any video entertainment company targeting these consumers must think in terms of two distinct packaging and pricing strategies.

Popular posts from this blog

Human Resource Transformation Enabled by IT

Many senior executives are taking a proactive approach to digital business transformation in order to achieve their strategic goals. Delivering revenue growth and profitability is now imperative for every function, including Human Resources (HR). The top 3 priority HR technologies this year are skills management, learning experience platforms, and internal talent marketplaces, according to the latest worldwide market study by Gartner. "With a tumultuous global economy, HR technology leaders face a balancing act in 2023," said Sam Grinter, director at Gartner . "Leaders must anticipate greater levels of accountability and demand for measurable outcomes to justify new technology investments." HR Transformation Market Development Forty-four percent of HR leaders report driving better business outcomes is their number one strategic priority for HR technology transformation over the next three years. Growth in headcount and skills (26 percent) and cost optimization (17 p

Virtual Reality Market Set to Reach $100 Billion

Virtual Reality (VR) market growth is now finally coming to fruition. Thanks to current actions and market momentum, VR is approaching what can be considered critical mass. And, not a moment too soon. This growth momentum comes from new hardware and content releases, accelerating enterprise value recognition, and a significant metaverse wild card that could potentially lift adoption and usage. According to the latest worldwide market study by ABI Research, over 85 million VR Head Mounted Displays (HMDs) will be shipped in 2027 across consumer and enterprise segments, creating a $100 billion VR market that includes hardware, software, and services. Virtual Reality Market Development "Expectations have been high in VR for years, and even decades, without notable growth to show. That growth is finally coming over the next five years," said Eric Abbruzzese, research director at ABI Research . The barrier to entry is lower than ever, all while content performance and user experien

How Savvy Pioneers Lead the Future of Work

Hybrid and fully remote work are inevitable in the Global Networked Economy where high-performance talent demands flexibility from employers. To enable these progressive work models, organizations are investing in a wide range of technologies to support more agile types of employment.  According to the latest worldwide market study by International Data Corporation (IDC), leading organizations will spend nearly $1 billion on the Future of Work (FoW) in 2023 -- that's an increase of 18.8 percent over 2022. Future of Work Market Development "Work models continue to evolve, but 37 percent of decision-makers in a recent global survey note that Remote and Hybrid work models will be an embedded part of accepted work practices, supported by a continued shift to the cloud, increasingly instrumented and interconnected physical workplaces, and intelligent digital workspaces," said Holly Muscolino, group vice president at IDC . According to the IDC assessment, organizations must mak