Study sees more U.S. homes linking TVs to Internet; few cutting cords

A study released this week by Leichtman Research Group (LRG) found that nearly two-fifths of all households in the U.S. have at least one TV set connected to the Internet via either an IP-enabled video device or the TV itself. Internet-based TV connectivity hit the 38% mark this year, up from 30% last year and 24% two years ago.

Connectivity leans heavily toward gaming platforms, with 28% of all households having a video game system connected to the Internet. Many connected consumers, however, use a mix of devices. Only 16% are connected via game systems alone. Blu-ray Disc players are the second most popular Internet-connected devices, followed by connected TVs and finally an Apple TV or Roku set-top box.

“One of the morals of the story is, it’s not about smart TV,” said LRG Founder and Principal Analyst Bruce Leichtman. According to his research, consumers were four times as likely to be connected to the Internet by a game system alone than solely by an Internet-enabled TV set.

Not surprisingly, weekly viewing via connected devices is also up. LRG’s 1,251-household survey found that 13% of all adults tap into the Internet weekly through these devices, compared to 10% last year and 5% two years ago.

Leichtman also noted that Netflix, whose clients are integrated into most Internet-connected video devices, plays a large role in the weekly viewing patterns, but he emphasized that Internet-delivered video is creating a both/and rather than either/or model.

“Video is increasingly being watched on different platforms and in different places, yet these emerging video services still generally act as complements to traditional television viewing rather than as substitutes,” Leichtman said.

As a result, LRG sees few households dropping Pay TV entirely. With time spent watching TV holding steady, Leichtman said there was “little evidence” that a significant number of consumers was dropping multi-channel video services “to watch video solely via these emerging services.”

The cord-cutting debate nonetheless continues. According to a report released last week by Toronto-based Convergence Consulting, 2.65 million American cut the cord between 2008 and 2011, with more than 1 million leaving cable in 2011. For his part, Leichtman reports that the Pay TV industry (cable/satellite/telco) grew by 380,000 subscribers in 2011.

A related trend, discussed by Bernstein Research Senior Analyst Todd Juenger in a recent note on U.S. media ratings, is the loss of some 400,000 U.S. TV households, especially in the 18-to-49 year-old bracket. Suggesting that only 70,000 U.S. households may have cut the cord from Q3 2011 to Q3 2011, Juenger thinks that reduced household formation, especially among the so-called boomerang generation (i.e. children, especially young men, who are returning to live with parents) is a contributing factor in the much larger contraction.