Younger Adults Are Streaming Video, Dropping Cable

Do you remember when cell phones were a blip on the radar screen and landline phones reigned supreme? Just 21 percent of households reported spending on cell phone service during an average quarter of 2000, and 94 percent spent on landlines. It took until 2010 before the cell phone market surpassed the landline market. In 2014, 69 percent of households spent on cell phone service during an average quarter and a smaller 47 percent spent on landline. The transformation from landline to cell occurred incrementally, with households headed by younger adults adopting cell phones first and older householders playing catchup.

It's happening again. This time, television is being transformed as streamed and downloaded video replaces cable and satellite television service. Between 2010 and 2014, average annual household spending on streamed and downloaded video grew faster than spending on any other entertainment product or service—rising from $2.11 to $17.80, after adjusting for inflation. Behind the growth in spending is the expansion of the customer base: the percentage of households purchasing streamed and downloaded video during an average quarter grew from just 1.4 percent in 2010 to 13.1 percent in 2014, according to a Demo Memo analysis of Consumer Expenditure Survey data.

Following the pattern of cell phone adoption, streaming and downloading video is most common among householders under age 45. These are also the age groups with the biggest percentage-point declines in spending on cable and satellite television service. Cable and satellite customers still far outnumber streaming and downloading customers even in the younger age groups, but that's likely to change...

Percent of households purchasing streamed and downloaded video (and cable/satellite television service) during average quarter of 2014
Under age 25: 16.5% (39.1%)
Aged 25 to 34: 19.1% (58.9%)
Aged 35 to 44: 18.3% (70.0%)
Aged 45 to 54: 15.3% (73.4%)
Aged 55 to 64: 9.5% (75.7%)
Aged 65-plus: 5.0% (78.4%)

Source: Demo Memo analysis of the Consumer Expenditure Survey