It's not just the economic downturn, but financial woes are certainly accelerating the trend.
No landline. No cable. No satellite dish. No DVD player. Even no TV is no longer an anomaly in many households.
According to a Nielsen survey last autumn, over 17 percent of U.S. households have cut the cord to their landline phones. That figure soars to 34.5 percent for young adults, and it's only going to get bigger as the economy and changing consumer patterns take hold. Colleges and universities are a trend accelerator, many of which have lately banished landlines from their dorms in a cost-cutting effort. Anyway, who needs 'em?
And having cut one cord, why not keep going? Apparently, that's just what consumers are doing. Rising unemployment and shriveling 401(k)s are doubtless contributing to the trend. Consider the numbers: 6.5 percent of U.S. homes aren't technologically equipped for digital TV. It's estimated some 1.1 percent of U.S. households are TV-free.
Viewers who still watch the tube are paring down their habit. Cable, satellite, and pay-channel subscriptions are in sharp decline. As Walt Disney CEO Robert Iger recently told analysts about the company's entertainment businesses, there are "signs of secular change as competition for people's time is increasing and the abundance of choice is allowing consumers to be more selective."
Iger wasn't just referring to television. Trade organization Digital Entertainment Group estimates that last year, DVD sales fell 8 percent to $21.6 billion, following a lackluster 2007. Another industry is withering.
Sure, blame the economy. Also blame Netflix's streaming video-on-demand service, YouTube, Hulu, and social networks. Heck, blame the economy with the entire Internet while you're at it.
How to Decouple
Even "TV Week" just published a tip sheet for living cable- and satellite-free. It boils down to "turn on your computer and go to Hulu.com, NBC.com, ABC.com, CBS.com, Fox.Com, TheDailyShow.com, CartoonNetwork.com and so on and watch your favorite shows. It's really that simple."
Apparently, many viewers didn't wait for instructions. Disney's earning dropped 32 percent in the first quarter, News Corp.'s stock is down 70 percent over the past two years, and CBS shares slumped 73 percent in the past year alone.
This is attributable to more than a decline in ad sales. We're seeing a sea change in consumer media consumption patterns, one that will not only impact major entertainment conglomerates' bottom lines but also weigh heavily on electronics manufacturers. In other words, if you plug your PC into your TV or stream video-on-demand, who needs a new DVD player? Or cable box? Or satellite dish?
Think it's just Gen Y that's cutting all those cords? Think again. Hitwise's Bill Tancer thoughtfully analyzed online video user demographics in a recent "Wall Street Journal" article and came up with some surprising developments.
While the major social networks and YouTube were rapidly adopted by 18 to 24 year olds at launch, the largest age group visiting Hulu at launch were visitors over 55. At 47 percent of all site visits, these much older users trounced the "early adopters," which in Hulu's case accounted for only 17 percent of traffic at last March's launch.
Tancer initially thought his findings were off, until he realized Hulu attracted its viewers the old-fashioned way: with articles in "The New York Times" and other traditional media outlets. Over 20 percent of Hulu's traffic came straight from newspaper sites, which are frequented by over-55 users.
Lessons to Be Learned
Consumer media consumption patterns are changing at an accelerating rate. The reason is changing and more accessible technology, with the economic downturn spurring adoption -- and rejection -- of delivery channels and devices once taken for granted as must-haves.
While not great news for media companies, recognizing and capitalizing on changing consumer media consumption patterns can be a boon for advertisers. Cheaper media buys, more precise targeting, and better campaign data will all result from connecting with consumers in their new channels of preference. But particularly in the short term, finding and segmenting them, as well as determining the formats and creative that speak to them in digital channels, will present a new set of challenges.
In short, what's bad news for broadcast is good news for digital marketers, particular those ready to pioneer new tactics, techniques, and strategies in mobile and video advertising.
It won't be easy. But it will usher in an exciting new era of innovation and discovery, not to mention accountability.
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Rebecca was previously VP, U.S. operations of Econsultancy, an independent source of advice and insight on digital marketing and e-commerce. Earlier, she held executive marketing and communications positions at strategic e-services companies, including Siegel & Gale, and has worked in the same capacity for global entertainment and media companies, including Universal Television & Networks Group (formerly USA Networks International) and Bertelsmann's RTL Television. As a journalist, she's written on media for numerous publications, including "The New York Times" and "The Wall Street Journal." Rebecca spent five years as Variety's Berlin-based German/Eastern European bureau chief. Rebecca also taught at New York University's Center for Publishing, where she also served on the Electronic Publishing Advisory Group. Rebecca, author of "The Truth About Search Engine Optimization," was ClickZ's editor-in-chief for over seven years.
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