Forget cord cutters, Cord-nevers must be scaring cable companies

By Mike Flacy October 14, 2015

netflix-house-of-cards-tablet edit — Image used with permission by copyright holder

Based on a recent survey of 32,000 adults conducted by data analysis firm Forrester Research, roughly 18 percent of Americans have never actually subscribed to premium TV service through a cable or satellite company. While the majority of those respondents were at least age 32 and over, about seven percent of ‘cord-never’ Americans are between the ages of 18 and 31; a prime marketing demographic for advertisers.

Furthermore, the growth rate of cord-nevers suggests that roughly 50 percent of Americans under the age of 32 will have never subscribed to a premium TV service by the time we reach 2025. That’s a massive segment of the population that will be turning to digital delivery services rather than calling up their local cable company for a stack of set-top boxes and a hefty monthly bill.

Discussing the growing segment of cord-nevers, Forrester analyst James McQuivey stated “While older cord-nevers understood that they would have to live without access to some of the best programming by forgoing pay-TV service, younger digital cord-nevers have grown up believing that they can have all of the TV they want without paying a traditional TV distributor for it.”

Interestingly, the report also digs into Apple’s general lack of impact on capturing dollars dedicated to the entertainment budgets of cord-nevers. McQuivey said “When we asked our respondents if they used iTunes to watch video, only cord cutters responded in the double-digit range at 10%. The rest, including digital cord nevers at 7%, fell back into single digits.”

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According to McQuivey, Apple consumers are using the Apple TV to watch Netflix and other streaming services rather than purchasing television episodes or entire seasons through iTunes. Even if Apple launched its rumored competing subscription service with exclusive content, it may be too late to entice Apple TV owners to switch services.

Of course, Apple could simply drop Netflix from the App Store in favor of a hypothetical Apple subscription service, but consumers would likely shift to other set-top boxes with Netflix as an option. Amazon is already trying a twist on this tactic to push people to the Fire TV set-top box, basically by withholding the Amazon Instant Video app from competing platforms like Apple TV and the Google Chromecast.

While Forrester Research stresses that the death of premium television is still a long way off, the impact of digital streaming services on the purchasing decisions of consumers is undeniable. Looking ahead, Forrester Research analysts are predicting that companies like HBO will have to start cracking down on password sharing as the market shifts from a majority of premium TV subscriptions to a majority of digital Web subscriptions.

Regarding advertising, McQuivey also has some advice for companies that are trying to reach that crucial 18 to 31 year old demographic. McQuivey said “Today’s 20-somethings are already hard to reach via TV, and the next generation will be tougher. We recommend experimenting with mobile video advertising, embedded marketing, and virtual- or mixed-reality ad experiences to reach this crucial audience.” It’s likely that advertisers will also increase product placements on television shows that are exclusively available on streaming services.

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