Mike Cavalier, a 28-year-old New York-based college administrator, is a regular viewer of Downton Abbey, The Daily Show With Jon Stewart and Breaking Bad. But he's not watching any of them on TV; instead, he uses online services such as Netflix, Hulu and iTunes. "I do own a TV," he says. "But I only use it to watch DVDs."
Cavalier lives in one of the five million homes that Nielsen calls "zero-TV households" (also known as cord cutters), which don't own a TV set or don't use the one they have to watch programs through a broadcast, cable or satellite service. Cord cutters have grown from three million in 2007, with two-thirds of them satisfying their TV fix via a personal computer, smartphone or tablet. Being so tech-savvy allows them to watch shows on their own schedule and, without necessitating a cable subscription, more cheaply.
What worries TV network execs - still dependent on ad revenue and cable fees - is that 48 percent of cord cutters are in the high-spending 18-34 age group. It's a sign of a generational divide as younger viewers are growing up and consuming content differently from their parents. "There has been a graying of television," says Brad Adgate of ad-buying firm Horizon Media. "It happened with other traditional media, like print, when digital options came along."
The big question is what kind of impact the young cord cutters will have on the future of television. "What we still don't know is whether by the time they are 30 and married, will they be coming home and turning on NCIS on their TVs?" asks one veteran broadcast executive.
The CW - whose online viewers are on average 10 years younger than those who watch the network on TV sets - is adapting to the trend by running the same ads on both the online and broadcast airing of its shows. "About 20 percent of CW viewing is done digitally," says executive vice president Rick Haskins. "A screen is a screen."
Haskins says the CW was at the front lines of the digital TV viewing revolution since Gossip Girl premiered in 2007. "It was a cultural phenomenon that the Nielsen numbers didn't justify, but we knew everybody was talking about," he says. "We knew our viewers were consuming it differently." This season, Haskins is seeing a similar pattern with The Carrie Diaries, the CW's second most popular show online, even though it ranks seventh on the network among viewers watching on a conventional TV.
Nielsen is now trying to catch up by adding cord cutters who watch via the Internet to its ratings sample and will eventually include tablet and smartphone viewers.
It's a brave new TV world.
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