Cord-Cutting Perhaps Not as Severe as Expected, Study Finds

83% of U.S. Households Subscribe to a Pay-TV Service

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For all the talk over cord cutting, one research group has found that the decline in pay-TV subscribers is actually not as alarming as some assumed.

According to the latest annual study of the subject by Leichtman Research Group, 83% of all U.S. households subscribe to pay-TV from cable, satellite or phone companies. That's down from 87% in 2010 -- but it's up from 81% in 2005, according to the study.

The study does not count streaming video on demand services such as Netflix and Hulu in its pay-TV totals. But it did say that 63% of non-subscribers get a subscription video on demand service.

Sixty-two percent of non-subscribers have an over-the-air antenna, the study found.

The biggest obstacle for the pay-TV industry appears to be among those renting their homes. Renters are more likely to be non-subscribers than in any year since 2006, with 23% not subscribing to a pay-TV service. In comparison, just 12% of home owners do not subscribe to pay TV.

"Changes in the dynamics of the pay-TV industry are not driven just by those exiting the category, but also those coming into the category," said Bruce Leichtman, president and principal analyst for Leichtman Research Group, in a statement. "Historically, consumers have gone in and out of the pay-TV category, primarily for economic reasons. While the rate of those leaving is actually similar to a decade ago, those who are entering or reentering the market has decreased over time, and the industry is not keeping pace with rental housing growth."

Of those who did subscribe to a TV service in the past year, 2.5% have since disconnected, compared to 1.5% in 2010 and 2.3% in 2005.

One of the biggest issues for consumers has been the cost. The survey showed that the average spending on pay-TV services is $99.10 per month, a 39% increase from 2010. Dish Network's new Sling offering, a slimmed-down TV bundle at $20 per month, is designed to address that challenge.

While the total number of pay-TV subscribers was similar at the end of the second quarter this year as the same period in 2010, the study noted, over the past five years there's been an increase in occupied housing. As a result, the penetration of pay-TV households has decreased.

The findings are based on a telephone survey over 1,222 households, according to Leichtman Research.

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