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Cord-Cutting Rises as Consumers Shift to Streaming Over-the-Top Video, According to NTIA Survey

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BROADBAND BREAKFAST INSIGHT: That latest internet use survey from the Commerce Department’s National Telecommunications and Information Administration shows that the proportion of internet users watching videos online has grown from 45 percent in 2013 to 70 percent in 2017. The organization added a question about over-the-top vide viewing to its survey in order to track trends and demographic differences in internet use. Overall, 73 percent of U.S. households had a cable or satellite television subscription in 2017, which is down from a high about a decade earlier.

Cutting the Cord: NTIA Data Show Shift to Streaming Video as Consumers Drop Pay-TV, from NTIA:

Americans increasingly are moving away from cable and satellite pay-TV services and opting to stream online video offerings, data from NTIA’s latest Internet Use Survey show. While most households still subscribe to cable or satellite television services, the survey shows the proportion of Internet users watching videos online has grown from 45 percent in 2013 to 70 percent in 2017.

Internet-based video services typically provide on-demand streaming from a large content library, and are not dependent on the offerings made available by any particular cable or satellite provider. The shift away from pay-TV services crosses all age groups, but younger Internet users have consistently been much more likely to watch video online than their older counterparts. For example, 86 percent of Internet users between the ages of 15 and 24 watched video online in 2017, compared with just 40 percent of users ages 65 and older (see Figure 1).

Graph showing percentages of Internet users watching videos online

Given this rapid change in just a few years, as well as the significant demographic differences, NTIA in 2017 added survey questions that specifically asked about subscriptions to traditional cable and satellite programming. Overall, 73 percent of U.S. households had a cable or satellite television subscription in 2017. Of the 27 percent that did not, two-fifths (40 percent) were “cord cutters,” or households that reported previously having a subscription, while the other 60 percent said they never signed up.

Internet users in cord-cutting households were more likely than their peers to watch video online; 82 percent of cord-cutting Internet users watched video online in 2017, compared with 67 percent of those in households with a cable or satellite television subscription, and 71 percent of those in households that never had such a subscription. This is an indicator of how the traditional television subscription is faring in the era of pervasive streaming, and we will continue to track this trend in future studies.

Why are Americans dropping subscription services? For some, particularly younger viewers, it’s a matter of preferring online video to subscription services. While 26 percent of non-subscribing households between the ages of 15 and 44 cited the use of Internet-based video services as a reason, only 15 percent of their counterparts between 45 and 64 and 8 percent of those ages 65 or older cited this reason.

Concerns over cost and relevance were common to all age groups, with 46 percent of non-subscribers citing cost and 38 percent saying they had no interest. These results suggest that while cost and personal preferences dominate decisions about purchasing cable or satellite television services, the availability of Internet-based video services is also influential.

Nineteen percent of households lacking cable or satellite TV service cited using Internet-based video services instead of traditional television service. This includes 24 percent of cord cutters and 16 percent of households that had not previously subscribed.

About three-fifths of non-subscribing households were “cord nevers” that never bought a pay-TV subscription. The cord-never households tend to be younger, lower-income and less likely to be non-Hispanic white than those with cable. In contrast, cable subscribing households are on average over 50, and less likely to have children in the house than cord-cutters. Consider that there is nearly a 20 percentage point difference in terms of mean age between cable and non-cable households.

 

Figure 2: Selected Characteristics by Current or Previous Cable Subscribership
Percent of Households, 2017

Has Cable Previous Cable Use Never Had Cable
Total Households 92.7 Million 13.8 Million 20.8 Million
Family Income < $25K/Year 19% 25% 38%
School-Age Child Present 23% 27% 22%
Located in Rural Area 14% 13% 14%
Household Reference Person* Characteristics
Mean Age 53.0 45.8 47.6
No Post-Secondary Education 35% 32% 45%
White, non-Hispanic 69% 67% 57%
Internet Usage Details
Internet Use at Home 81% 81% 62%
* The reference person is the first individual in each household who is identified as owning or renting the housing unit.

 

This is the first time NTIA has asked questions about cable and satellite television subscriptions. Data gathered in the next Internet Use Survey will build upon the research generally in how Americans are using the Internet, and more specifically should shed more light on trends in subscribership.

NTIA intern Kevin Mersol-Berg contributed to this report. Want to read more of NTIA’s research? Sign up for the Data Central mailing list to be among the first to hear about future publications.

Source: Cutting the Cord: NTIA Data Show Shift to Streaming Video as Consumers Drop Pay-TV | National Telecommunications and Information Administration

Broadband Breakfast is a decade-old news organization based in Washington that is building a community of interest around broadband policy and internet technology, with a particular focus on better broadband infrastructure, the politics of privacy and the regulation of social media. Learn more about Broadband Breakfast.

Social Media

Vague Social Media Laws Create Fear in the Middle East. Can Encryption Tools Help?

Experts discuss how social media is being treated in the Middle East and how to respond.

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Chris Meserole, senior fellow at the Brookings Institution

WASHINGTON, January 25, 2022 – Far from being the savior of democracy in the Middle East, four experts said Monday that social media, and government regulation of it, is beginning to hurt civil rights activists.

The world is witnessing an increase in laws restricting social media access and hence regulating freedom of speech, especially in the Middle East, agreed the panelists, speaking at a Brookings Institution event.

Dina Hussein, the head of counterterrorism and dangerous organizations for Europe, the Middle East, and Africa at Facebook, and Chris Meserole, a senior fellow at the Brookings Institution, stated that too many countries are passing vague laws about what is and isn’t allowed on social media.

These new laws are purposefully unclear, they said. This new strategy has made it easier for the government to take down posts and restrict critics’ internet access while leaving up the posts of supporters and government officials.

These laws also spread fear within the regime because the vagueness puts anyone at risk of being arrested for something they post, they said.

When asked what can be done, Hussein said that Facebook promotes honesty through a website that focuses on Facebook’s own transparency and raises awareness of other countries’ laws for their users. In addition, Facebook is personally working to support civil rights activists in the areas of the world that are implementing such laws, Hussein said.

Encryption to avoid surveillance

Meserole said that democratic governments should not be fighting “fire with fire.” Instead, he wants civil rights groups in the Middle East to strengthen their ability to operate without social media. Many activists rely on social media to build their bases and spread their message. So, Meserole emphasized that as the authoritarian regimes increase their abilities to watch, manipulate, and censor social media, democratic governments should invest in technology that will help those who are fighting for civil rights encrypt their media or work outside of the surveillance of government.

Another concern of the guest speakers was the rise in online misinformation and the trend of authoritarian regimes making new accounts to promote their message rather than trying to censor the language of the opposition.

Some people wonder why these groups don’t just eliminate media within their countries. Meserole’s answer is that the government has it is own various benefits to having social media, and so they pass vague internet laws that allow them to have more legal control instead.

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Antitrust

FTC Mum on Microsoft-Activision Deal, Proposes Review of Merger Guidelines

The deal would elevate Microsoft in an even more favorable position in the games-as-a-service market.

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FTC Chairwoman Lina Khan on CNBC last week

WASHINGTON, January 24, 2022 – As Federal Trade Commission Chairwoman Lina Khan does media rounds this past week, she has refused to comment on last week’s news that Microsoft has agreed to buy video game making giant Activision-Blizzard for nearly $70 billion.

As per policy, the FTC and the Department of Justice, which on Tuesday jointly held a press conference on merger reform on the same day of the announced consolidation, said they could not comment on the deal, which would increase the Xbox maker’s gaming market share and allow it to better compete with Japanese behemoth Sony.

During the press conference, Khan, installed as chairwoman in June as an already outspoken critic of certain big tech practices, announced that the organizations would be launching a review of merger guidelines. Khan stressed that the current guidelines do not adequately protect consumers and promote competition in the era of the digital economy.

“While the current merger boom has delivered massive fees for investment banks, evidence suggests that many Americans historically have washed out with diminished opportunity, higher prices, lower wages, and lagging innovation,” she said. “These facts invite us to assess how our merger policy tools can better equip us to discharge our statutory obligations and halt this trend.”

She reiterated those goals on a CNBC interview on Wednesday. The purchase of the highly influential Call of Duty franchise maker will have to go through her office. It also presents another stress test for the office, as it is already engaged in an existing lawsuit against Facebook practices. Both Facebook and Amazon have asked for Khan to be recused from investigations in their companies because of her past positions on them.

The deal would significantly expand Microsoft’s Game Pass platform, which offers free games to play for a monthly subscription. Microsoft announced on the day of the proposed deal that Game Pass surpassed 25 million subscriptions.

“Upon close, we will offer as many Activision Blizzard games as we can within Xbox Game Pass and PC Game Pass, both new titles and games from Activision Blizzard’s incredible catalog,” said Microsoft Gaming CEO Phil Spencer said in a statement.

Despite its numerous successful intellectual properties, Activision Blizzard has been marred with scandal in recent years. In 2021, the company was sued by California Department of Fair Employment and Housing for promoting a “frat boy” culture, whereby female employees were not only allegedly discriminated against, but also subjected to sexual assault and misconduct.

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Big Tech

Attorneys General Suing Google Over Location Data Collection

The D.C. attorney general is leading other state AGs alleging Google mislead consumers into believing they could disable location tracking.

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Alphabet CEO Sundar Pichai

WASHINGTON, January 24, 2022 – The Office of the Attorney General for the District of Columbia has filed a lawsuit Monday against Google alleging “deceptive and unfair practices” related to obtaining consumer location data.

Attorney General Karl Racine‘s office argues that Google has been in violation of D.C.’s “Consumer Protection Procedures Act” since at least 2014. According to the complaint, Google is alleged to have lied to consumers, intentionally giving them the impression that they can disable Google’s ability to collect and retain user location data.

“In reality, consumers who use Google products cannot prevent Google from collecting, storing, and profiting from their location,” the complaint reads.

The documents outline that Google’s primary source of revenue is earned through digital advertising, and thus, Google was incentivized to harvest consumers’ personal data to better target ads – an effort that is significantly improved by collecting location data from users.

“Location data is among the most sensitive information Google collects from consumers,” the complaint says. “Location can also be used to infer personal details such as political or religious affiliation, sexual orientation, income, health status, or participation in support groups, as well as major life events, such as marriage, divorce, and the birth of children.”

Racine’s office is leading the effort with attorneys general in Texas, Indiana and Washington filing their own complaints, he said on Twitter.

The complaint further explains that due to reporting done Associated Press in 2018, it was revealed that Google explicitly deceived customers by allowing them to believe they have opted out of location tracking when the reality is their decision has no bearing on what kind of data Google collects.

“The AP story exposed that Google’s promise to consumers was false. Even when consumers explicitly opted out of location tracking by turning the Location History setting off, Google nevertheless recorded consumers’ locations via other means,” the complaint said.

The ubiquity of Google products and services only compounds the risk, the plaintiff argues, as Google products are found “essentially everywhere consumers go.”

“Google uses this window into consumers’ lives to sell advertising that is ‘targeted’ to consumers according to personal details Google has learned about them, including their demographics, habits, and interests.”

Targeted ads have long been in regulator’s sights, both in the E.U. and the U.S..

The complaint states that it is in Google’s best financial interest to obfuscate exactly what data is being collected, how it is being collected, and why. “The Company’s exhaustive surveillance practices are most effective, and therefore most lucrative, where consumers have no clear idea how to limit Google’s access to their personal information.

“The District files this suit to correct the deceptive and unfair practices that Google has used and uses to obtain consumers’ location data, and to ensure that consumers are able to understand and control the extent to which their location data is accessed, stored, used, and monetized by the Company.”

The AG’s office is not only seeking to compel Google to cease these practices, but also forfeit all revenue generated by them.

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