Just about one in three homes in the US (really three in ten) have been found to have a TV that is connected to the Internet, whether it be through a game console, Blu-ray player or the TV itself according to a new report from LRG. If you are reading this, it is probably your house and not the neighbors to the left and right. Still, it’s not all that high of a percentage as it is just three of every ten households. If you look back just five or ten years, it’s a major leap forward.

The Leichtman Research Group, Inc. also found that only 10% of all adults watch video from the Internet via one of these devices at least weekly, compared to 5% last year.While that’s a doubling up of the percentage that means that, according to the 2010 Census report, that’s around 25 million people. Now, as you know, I like to pick stuff apart. If you then plug that 25M into the Nielsen and comScore numbers for monthly video viewing it means somewhere between 120 to 150M Americans only watch online video via either a computer (including tablets which are just portable computers) or a mobile phone. So of all online video viewers these connected-TV users constitute about 15.8% (the median between the percentages which would be 14.3% and 17.3%)

In 2010 the U.S. Census sent out information to roughly 120 million households so that sounds like a fair number to use for some calculations. 30% would be 36 million households.

What Fuels Connected-TV Usage

Netflix, plain and simple says the report. 30% of its users are watching online video through a connected-TV on a weekly basis. Also, according to the report, non-Netflix subscribers who use the connected-TV to watch online video weekly is only 3%.

Here’s what it says in their press release

This increased usage is heavily driven by Netflix subscribers, with 30% of Netflix subscribers watching video from the Internet via one of these connected devices weekly, compared to 3% weekly use among all non-Netflix subscribers.

According to the Netflix Q4 2010 financial results, they only have 20.01 million subscribers. So 30% of that would be only 6 million people. So then 6 million are watching Netflix weekly from their connected-TV (and 14 million are watching Netflix elsewhere or not weekly on the TV) which then leaves some 19 million people of which only 3% or 570,000 watch online video through their connected-TV on a weekly basis. Sure, since the main purpose of the game consoles, Blu-Ray players and really even the TV is not online video, the first is games, the second is optical discs and the third is over-the-air or cable/satellite broadcasts.

Shaky Statistics:

They say that 12% of all adults use Netflix Watch Instantly on a weekly basis. We already know that to be a stretch since 12% would be 28.8 million people which is 8.7 million more than Netflix claims have accounts. Now if they talked to multiple people in each household I suppose that could be true. But the way that they reported it all is a bit shaky and makes other numbers hard to take as factual.

Also in regards to Netflix:

  • 77% of Watch Instantly customers use it to watch movies and TV shows on a TV set, and 60% of this group access Netflix via a video game system

They also said that there was a 1% increase in adults who watch TV shows online weekly and that it is now 12%. It must be the same 12% that watch Netflix weekly, right? So according to their research, only those of you who subscribe to Netflix, watch video weekly.

Please, a show of hands in comments who watches videos weekly and doesn’t subscribe to Netflix. (that includes me).

But their shaky math in regards to Netflix aside, a large percentage, 23%, of the people they talked to had video game systems while only 10% had a connect TV and 7% had an Internet-capable Blu-Ray player. That sure seems like they talked to a lot of people I know not to mention sounds like it would certainly skew some numbers since most of the people they talked to didn’t have a device made specifically to connect the TV to the Internet. In fact, only about 129 people they talked to had connected TVs.

According to VGChartz, who does a great job of tracking video game sales numbers, there are some 41 million Nintendo Wii, 31 million Xbox 360 consoles and 19.5 million Playstation 3 consoles installed in homes across the US. All three of them are capable of connecting to the Internet and streaming video. I know there is some overlap in the install base so that’s not really a good number to go by, I’m just throwing that out there.

Also, The NPD Group stated that connected TVs are set to account for some 21% of all flat panel shipments this year worldwide, with roughly 8.75 million in the US.

Here’s a whole list of other stats I won’t even bother analyzing:

  • Among all mobile phone owners, 15% watch video on their phones at least weekly — compared to 10% last year, and 6% two years ago
  • 9% of multi-channel video subscribers are likely to switch in the next six months, compared to 10% the past three years — 6% of Netflix Watch Instantly users are likely to switch video providers
  • 20% of multi-channel video subscribers are likely to reduce spending in the next six months — Netflix subscribers, online video users, and premium subscribers are as likely as others to reduce spending
  • Overall, 0.3% of the sample dropped a multi-channel video service in the past year, do not plan to subscribe again in the next six months, and say that they don’t subscribe because they can watch all that they want on the Internet or in other ways (but most of this small number of respondents say that they would have dropped service to save money regardless)

The old pinch of salt routine

See how they switch from all adults to “the sample” for no apparent reason? It’s almost like a cable company funded this report. What makes me say that?

“The use of emerging video services rapidly increased over the past year, with Netflix being the key driver of this growth,” said Bruce Leichtman, president and principal analyst for Leichtman Research Group, Inc. “Even with this growth in emerging video services, this isn’t creating a significant trend in consumers ‘cutting the cord’ to multi-channel video services — including cable, satellite, and Telco video services. Despite a highly saturated market, coupled with slow housing growth, the multi-channel video market in the US still grew by over 500,000 subscribers in 2010. This survey found few ‘cord cutters’ over the past year, and little difference in the intent to switch or disconnect service from prior years.”

Now I’m not saying there are loads and loads of cord cutters actually out there. I’m saying I think they missed the mark overall with this research. Maybe they didn’t and it just sounds like it in the press release they’ve put out. I haven’t seen the whole report but it sounds pinch of salt-worthy to me.

Plus, Leichtman has a history of putting out what look like cable/satellite/telco leaning numbers and refuting cable cutting (here’s one from Daisy that cites their research).  You always have to consider the source when it comes to this stuff. Everyone seems to have some secret agenda when you just glance over the numbers like another digital intelligence website might do.

But not here bub! We take cold hard looks at the numbers until they crack under the pressure and give up the goods. In this case, the good are rotten, see dollface? Rotten to the core it seems.

The methodology

The report is based on a survey of 1,287 households nationwide and are part of a new LRG study, Emerging Video Services V and the study used a telephone survey of 1,287 adults age 18+ from throughout the continental US. The survey was conducted in January-February 2011. The random sample of respondents was distributed and weighted to best reflect the demographic and geographic make-up of the US. The overall sample has a statistical margin of error of +/- 2.8%. An additional survey of 302 cell phone-only households was also conducted to better understand what differences may exist between individuals in cell phone-only households and those with a landline phone.

So there’s a healthy margin of error there which accounts for some of what I perceive as inaccuracies.