Cutting the cord: Streaming TV gaining fans

Amy Toscano has cable television at her parents' house and in her college dorm room. But when she wants to watch TV, Ms. Toscano usually turns on her laptop.

“I'm definitely more of a streamer,” said Ms. Toscano, a 21-year-old chemical engineering student at Worcester Polytechnic Institute. “From the college student perspective, it's a little bit easier to watch things online, even the shows that are on cable.”

Studies show that millennials like Ms. Toscano have embraced online television. Streaming services, including Netflix, Amazon Prime and Hulu, allow viewers to watch TV on their own schedules, with different devices and without a cable TV subscription. But even as streaming services transform TV viewing habits, traditional cable TV companies are not yet dying.

Jeff Kagan, a wireless and telecommunications analyst, said new technologies and services are forcing paid-TV companies, including cable, satellite and telephone companies, to evolve from the traditional model of delivering television.

“The industry is changing dramatically,” Mr. Kagan said. “We're in the middle of a multi-decade transformation of cable television, telephone, wireless, internet – all these different services.”

Delivering TV over the internet is part of this transformation. Leichtman Research Group, a firm specializing in the broadband, media and entertainment industries, surveyed 1,207 U.S. households this year about the use of the streaming services Netflix, Amazon Prime and Hulu. The results showed that 51 percent of millennials ages 18 to 34 watch a streaming service daily compared to 33 percent in 2015. According to the survey, 64 percent of households subscribe to at least one of these services, and 29 percent of all adults watch one of these services daily.

The most popular streaming service is Netflix. The Leichtman Research Group survey showed that 83 percent of households with a subscription service used Netflix. According to its quarterly report, Netflix had 51.9 million U.S. subscribers as of June 30, 2017, adding about 1 million subscribers during the second quarter.

While Ms. Toscano prefers watching Netflix on her laptop, some millennials still use TV sets. Jared Cosby, a 20-year-old psychology major at the College of the Holy Cross, watches Netflix by connecting his laptop to the TV in his dorm room with an HDMI cable.

Hawar Haddadi, a 20-year-old chemistry major at Holy Cross, uses his PlayStation to stream Netflix. Mr. Haddadi connects the console to his TV and uses the dorm’s Wi-Fi to stream Netflix.

Smart TVs also connect to the internet, and other devices can be used to stream online services through TVs, including Roku, Chromecast, Amazon Fire TV and Apple TV devices.

With options for what to stream and which device to use, many people have decided to discontinue cable TV subscriptions – known as “cutting the cord.”

When Brianna Bonfiglio, 25, and Greg Affsa, 34, moved to Cherry Valley in Leicester last fall, they decided to cut the cord.

“We’re not home enough to watch cable TV,” said Ms. Bonfiglio, who works as a project manager in Boston.

Instead, Ms. Bonfiglio and Mr. Affsa, a product designer with a health care firm, subscribe to three streaming services: Netflix, Hulu and HBO Now. They watch most programming through a smart TV. Ms. Bonfiglio also downloads TV shows from Netflix to her tablet to watch while commuting on the train.

Streaming requires broadband internet, and Ms. Bonfiglio and Mr. Affsa said they currently pay $45 for Spectrum Internet through Charter. They pay approximately $30 for the three streaming services.

According to Spectrum’s website, standard monthly rates for internet services range between $54.99 and $104.99, depending on the speed. Spectrum TV rates range from $13.99 to $99.99, with options for additional services. Spectrum also offers 12-month promotional rates for bundling TV, internet and telephone services.

Netflix and Hulu subscribers pay between $7.99 and $11.99 per month.

Other online streaming services, like Sling TV, give viewers access to cable channels through bundles starting at $20. These bundles could include channels such as CNN, ESPN, A&E and the Food Network.

Fans of Boston’s sports teams face a dilemma when considering cord-cutting. Local viewers need a cable TV subscription to watch Red Sox, Bruins and Celtics games. Only Patriots games offer local fans some streaming options. CBS games can be watched online through CBS All Access for $5.99 per month. Games airing on other networks may be available with streaming bundles. And fans with an indoor antenna can watch CBS, NBC and Fox games without a cable TV or streaming subscription.

The indoor antenna, which can usually be purchased for less than $40, allows viewers to watch local programming, including sports and newscasts. Most Boston TV stations also stream newscasts online or through apps. Even with free options, however, millennials often turn elsewhere for news. Ms. Bonfiglio and Mr. Affsa, who do not have antenna, follow the news on social media and by listening to NPR. Ms. Toscano and Mr. Haddadi also use social media to follow the news.

Cord-cutting is reflected in subscription numbers for cable and other paid-TV companies. Leichtman Research Group gathers paid-TV subscriber data each quarter. In the second quarter, the largest cable, phone and satellite companies had more than 90.6 million TV subscribers and lost approximately 893,000 customers during the quarter.

Charter declined to provide subscription numbers for the Worcester area. According to the second quarter report, Charter had 17,071,000 residential and small/medium business customers in the U.S. and lost 76,000 subscribers during the quarter. Heidi Vandenbrouck, a spokeswoman for Charter, said in an email that during the past 12 months, Charter added TV customers in “longtime cable Spectrum systems.” Charter acquired Worcester’s cable system in 1999, according to Ms. Vandenbrouck.

But cable TV companies remain critical to the industry because streaming services require broadband internet. Leichtman Research Group reports that cable companies represent 64 percent of the broadband internet market. Charter’s Spectrum Internet brand had approximately 23.3 million subscribers at the end of the second quarter, adding 267,000 subscribers during the quarter.

Amanda Lotz, a communications studies professor at the University of Michigan, wrote in an email that cable companies should be considered internet companies. Ms. Lotz said internet services offer cable companies better profit margins than TV services.

Charter sees its internet packages as integral to online streaming services. Ms Vandenbrouck wrote in an email: “Our customers tell us they view streaming services as a complement to their Spectrum TV service. … And when consumers want to use streaming services, they need a great internet service – and we provide the fastest starting speeds with no modem fees, data caps or contracts.”

Alan Wolk, a media and entertainment industry analyst, said some traditional paid-TV companies, such as DirecTV, are beginning to offer internet-only bundles. He sees this as one way paid-TV companies can curtail cord-cutting.

“If I’m getting paid-TV from the same people I was getting my set-top box from, how is that cord-cutting?” Mr. Wolk said. “I just changed the delivery method.”

Mr. Wolk said he would like to see more paid-TV companies bundle services that appeal to millennial viewers.

“Change will happen when they start seeing significant losses,” Mr. Wolk said.

In an email, Ms. Vandenbrouck said the company continues “to invest in providing products and services that give consumers greater flexibility and more content on a growing number of devices. These include the Spectrum TV App, which enables customers to watch live TV, schedule their DVR and view On-Demand programming, on a variety of platforms – both inside and outside the home.”

Millennials are not the only ones streaming TV. Leichtman Research Group showed that 26 percent of people age 35 to 55 and 10 percent of people over 55 have a smart TV or streaming device.

Ms. Lotz said a person’s life stage rather than age often influences the cord-cutting decision process.

“The economics of cable packages look quite different to single households (regardless of age) than a family with multiple interests,” Ms. Lotz wrote in an email.

Millennials have not entirely abandoned cable TV. Mr. Cosby, who is from Waltham, watches the Red Sox on cable TV. While he usually watches TV for one hour or less on weekdays, he does not put aside time to watch specific shows each week. Instead, he scrolls through the offerings on both Netflix and cable TV.

“Kids nowadays don't follow the cable schedule (and) don't know what's going to be on,” Mr. Cosby said.

Ms. Toscano said her mother watches TV shows at specific times during the week. She said millennials embrace streaming services because they want to watch TV on their own schedules.

“We make the time for the television rather than the television making the time for us,” Ms. Toscano said.