As consumers continue to cut the pay TV cord, broadband-only households could nearly double to 40.8 million by 2023 from their current level of about 23.3 million homes, according to Kagan, a media research group within S&P Global Market Intelligence.
“The steep upward trend 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 senior Kagan research analyst Tony Lenoir, in a statement.
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. Over-the-top services offered at competitive prices is a major factor in compelling consumers to cut the cord, Kagan found. Other reasons for the strong growth projections of broadband-only growth include the ease of joining and cancelling online streaming services -- they typically do not require contracts.
“The value proposition of streaming video services touches a chord with the average consumer,” Lenoir said in the statement. “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.”
Broadband-only homes are expected to increase at an 11.9% compound annual growth rate between 2018 and 2023, according to Kagan. The researcher added that about 41.7% of wireline broadband households will be broadband-only by 2023. Kagan expects cable and telco broadband to serve nearly 75% of U.S. households by that time.
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