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Historic decline in TV ownership a warning shot for the television industry

Is it a quirky result of a historic recession, or a milestone marker revealing fundamental change in our media mix?

That's the question at hand, following news from The Nielsen Company that the universe of homes with television sets has declined for the first time in 20 years.

The reasons? The higher cost of digital television sets after the nation's broadcasters shifted to digital signals and younger people's preference for viewing video online, where they don't have to pay cable or satellite companies for content.

The number of TV households slid about 1 percent to 114.7 million, according to Nielsen's figures. That's a decline in the percentage of U.S. homes with televisions from 98.9 percent to 96.7 percent.

The New York Times has an excellent story on the subject, noting that the last time this occurred was back in 1992, after another serious recession. But back then, you didn't have a component of young people developing a video-watching habit outside of TV.

As the online video and DVD rental powerhouse Netflix develops original programming and Twitter becomes the new wire service anyone can access, you have to wonder: What does this mean for the future of traditional television?

Nielsen has emphasized the impact of low income households. But it's an arm of the TV industry, as invested in maintaining the perception of television's primacy as any network or cable channel; if young people are "cord cutting" away from cable and satellite, it may be time for providers to rethink rising prices which can make television a serious household expense.

Rather than a historic shift, I'm thinking this is a warning shot for the modern TV industry -- a new force chipping away at the traditional dominance of broadcast and cable television in our modern media mix.

Which means the ball is back in your court, TV types. Better give young folks and poor folks a reason to invest in your product. Or you won't have much of an audience left to monetize.

Click below for a look at Nielsen's press release:

Nielsen Estimates Number of U.S. Television Homes to be 114.7 Million

The Nielsen Company today announced the 2012 Advance/Preliminary TV Household Universe Estimate (UE) is 114.7 million, down from 115.9 million in 2011. Marking the first integration of the 2010 Census counts, the 2012 UEs reflect an aging population, as Baby Boomers increasingly shift out of the 35-49 demographic, as well as greater ethnic diversity.

The 2012 UEs also reflect a reduction in the estimated percent of U.S. homes with a television set (TV penetration), which declined to 96.7 percent from 98.9 percent. The last such UEs decline occurred in 1992, after Nielsen adjusted for the 1990 Census, and subsequently underwent a period of significant growth. Potential interrelated factors for the 2012 UE downward shift in TV penetration include:

1) Digital Transition: The summer of 2009 marked a significant milestone with a shift from analog to digital broadcasting. Following the transition, consumers were only able to view digital broadcasts via a set with a built-in digital tuner (i.e., a newer TV set) or an analog TV set connected to a digital-to-analog converter box, cable or satellite. TV penetration first dipped after this transition; the permanence of this trend was acknowledged in 2010 after the number of TV households did not rebound over time.

2) Economics: As with previous periods of belt-tightening, the cost of owning a TV is a factor in this UE decline; TV penetration first saw sustained decreases in second quarter 2009. Lower-income, rural homes were particularly affected.

3) Multiple Platforms: Nielsen data demonstrates that consumers are viewing more video content across all platforms-rather than replacing one medium with another. However, a small subset of younger, urban consumers are going without paid TV subscriptions. Long-term effects of this are unclear, as it's undetermined if this is also an economic issue, with these individuals entering the TV marketplace once they have the means, or the beginning of a larger shift to viewing online and on mobile devices.

Posted by deggans at 9:00:35 am on May 03, 2011