Analyst: US TV industry ‘entering period of prolonged structural decline’

Nielsen says more than two of every five American households now subscribe to a video on demand service, with Netflix in the bulk of them, a trend that has observers worried about the traditional TV industry’s health.

In all, Netflix is in 36% of all TV households, with Amazon Prime in 13% and Hulu Plus in 6.5%. Many households have more than a single service. Nielsen, in its Q4 2014 Total Audience Report, said some 35% of U.S. households have access to broadband but currently have no SVOD, a major opportunity for streaming services to grow.

Nielsen said traditional TV is still getting the majority of time, about 149 hours and 14 minutes of traditional TV monthly, down 4% from a year ago.

But, during the same period, Internet video viewing increased 38.5% to 10 hours and 29 minutes a month, and smartphone owners watched an estimated 43 hours and 14 minutes, an increase of 27% since Q4 2013.

“Increased video viewing on digital platforms to both native digital content and TV-produced content, as well as the rise of SVOD across all platforms, are changing the way we look at the consumption of traditional media.” said Dounia Turrill, Nielsen’s SVP of Insights said. “With continued and accelerating fragmentation, the risks and rewards are potentially high, and the ability to stake a claim in the expanding industry pie is central to companies’ growth.”

The research was conducted in the fourth quarter.

‘A period of prolonged structural decline’

The Wall Street Journal, meanwhile, citing sources from the Cabletelevision Advertising Bureau, said as much as 40% of TV ratings declines during the second half of 2014 can be attributed to viewers turning to SVOD services.

Sanford C. Bernstein analyst Todd Juenger, in a March 9 statement, warned that the traditional TV industry is facing a crisis.

“We believe the U.S. television industry is entering a period of prolonged structural decline, caused by a migration of viewers from ad-supported platforms to non-ad-supported or less-ad-supported platforms,” Juenger said.

Stay tuned.

Jim O’Neill is Editor of Videomind and Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn