Photo: Kevin Bauman
The housing market and the cable/satellite TV market are not directly linked, according to analysts at ISI Group, which follows TV media stocks.Their analysis is significant because the usual assumption is that there is some sort of statistically linear relationship between the formation of new households and the purchase of new pay TV subscriptions.
During the recession in 2008, 2009 and 2010, the number of households shrank for the first time since 1966 as people moved in with their parents or became homeless.
That ought to have shrunk the ranks of pay TV buyers by a related number—but ISI’s analysis shows it didn’t.
While subscriber spending dipped, it still emerged from the recession 3 per cent higher than when it began:
Photo: ISI Group
ISI attempted to figure out the relationship between household formation and pay TV subs, but concluded the data was so filled with noise that it was not possible to calculate a statistically significant relationship. ISI says there is a broad correlation between new houses and new subscriptions, but no measurable cause-and-effect relationship:
“[W]e can’t peg Pay-TV numbers precisely to housing … [but] we still believe it to be a very powerful statement to say that it’s utter nonsense for one to predict X amount of Pay- TV net adds based on Y homes formed in a given time period.”
The other problem is that TV penetration is nearly at 100 per cent of the market, and has nowhere to go but down. It can only get growth from new household creation. But if new homes don’t always mean new TV subs, then that’s a problem in a market where young people just don’t feel the need to watch TV the way their parents do:
Photo: ISI Group
Could this also mean that even if there is a recovery in the housing market it may not lead to a recovery in cable TV? We don’t know. But it seems plausible.
I’ve recently suggested that the data show that consumers are losing interest in paying to watch TV in favour of using their internet connections for video entertainment, and that TV may become a vestigial product, like the landline phone.
If cable subs don’t grow as household formation increases post-recession, I’ll be proven right. The fact that housing numbers aren’t directly linked to TV subscriptions ought to be worrying for an industry whose current business model—advertiser and subscription revenue—is the same as newspapers.
Everyone knows what the web did to them.
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