Fewer US TV Households Because of Fewer Used TV Sets

Nielsen recently announced that the universe of US TV households would be reduced for the 2012-2013 television season by 500,000. TV set penetration is now 96.7% of US households, down from 98.9% the prior year.

The company attributed the decline to 3 factors:

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.

This is a TV set.

The first two factors also combine in another way. Many (probably most) of the TV sets in households prior to the digital transition were analog sets. Unless they are connected to a converter box (or cable or DBS receiver), they are no longer TV sets, because they can't be used to watch...TV. The cost of a usable television set has effectively gone up, since there are no cheap, old, working digital sets to be handed down to friends and family or found at the thrift store.

This is no longer a TV set.

While the penetration of TV sets will likely drift up over the next few years as digital sets trickle down, the matter of TV set penetration may no longer be significant. A person watching, say, ABC programming on a laptop or tablet is watching television for all practical purposes and Nielsen will inevitably address this reality in their universe estimates and ratings in the near future.