New Nielsen Data Fuels TV “Turning Point” Debate
Michael Greeson, Founding Partner, Research
May 6, 2011
This week Nielsen released its 2012 Advance/Preliminary TV Household Universe Estimate, predicting that the number of TV households in the U.S. will decline from 115.9 million in 2011 to 114.7 million in 2012 (a loss of 1.2 million TV households, about 1%).
For all intents and purposes, this means that the number of U.S. TV households will likely remain flat: a predicted decline of 1% could just as easily be an increase of 1% when the final data is tabulated. As a market researcher, I know how crazy it is to hang your hat on any predicted change of 1%, regardless of the direction.
But that tidbit is far from the most interesting part of Nielsen’s release; instead, it’s the explanation it offers for these trends that caught my attention.
(1) UEs reflect an aging population, as Baby Boomers increasingly shift out of the 35-49 demographic, as well as greater ethnic diversity. Excuse me? Since when do TV-owning Baby Boomer’s moving into a higher age bracket cause a decline in the number of TV households? Are they throwing their TVs out when they get older? Or is Nielsen really trying to say that TV-owning households are getting older and being replaced by younger adults that are less likely to own a TV?
(2) The transition from analog to digital, meaning those that did not upgrade to digital or connect a digital-to-analog converter are left without TV (not without a television set, just without TV service—a distinction Nielsen did not recognize).
(3) Continued “belt tightening” due to the poor economy that disproportionately impacted lower-income rural homes.
(4) The use of multiple video platforms, though not necessarily the replacement of one medium with another. Nielsen continues to hold on to the argument that consumers are viewing more video across more platforms but this is having no deleterious effect on TV viewing. It has also failed to statistically recognize that the video viewing on a television set is today comprised of multiple conduits, meaning I may watch as much TV today as I did last year, but that viewing is increasingly split across broadcast, cable, game consoles, and Internet set-top boxes.
(5) “A small subset of younger, urban consumers are going without paid TV subscriptions.” I wanted to quote this verbatim from Nielsen’s post, as TDG has long argued Nielsen would soon have to admit this fact. While admitting this could be a contributing factor, however, Nielsen attempts to diminish its significance as the “(l)ong-term effects of this are unclear” because it remains undetermined if this is an economic issue that will change once younger consumers start making more money, or whether this is “the beginning of a larger shift to viewing online and on mobile devices.” Nielsen admitted that they have yet to study this phenomenon in any specific way, so it remains uncertain to what extent it impacts the “TV household” equation.
On Tuesday, Nielsen’s Pat McDonough, the senior vice president for insights and analysis at Nielsen, stated in a New York Times interview that the fact that tech-savvy younger consumers are more likely than others to use non-TV devices to view TV programming is causing Nielsen to expanding its definition of “television household” to include Internet video viewers. Imagine the impact that will have on Nielsen’s measurements, not to mention the way the industry views the importance of Internet video on non-TV platforms.
As TDG analyst Bill Niemeyer pointed out, it is a bit odd that Nielsen would reveal this number so early in the year (UEs are officially released in August), not to mention it hastily sent out an announcement at 10 PM on Monday night telling clients there would be a noon webinar on Tuesday to discuss the results. Strange behavior on the part of the nation’s leading TV measurement firm, but upfronts are about to start and this is a good way to get attention for their new multiplatform measurement products.
Does this mean that the long-rumored “cord-cutters” or “cord-nevers” are a legitimate phenomenon with which the PayTV industry should be immediately concerned? I wouldn’t go that far, at least not yet. As TDG has long maintained, the short-term impact of the shift to quantum video access will first manifest itself in substitution behavior (e.g., paying for Netflix instead of HBO), not outright PayTV service cancellation. However, the long-term impact of the widespread availability of cost-competitive OTT services will undoubtedly lead many to forgo traditional PayTV services. But that’s 4-5 years in the future, which is TDG’s terrain, not Nielsen’s.
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