Television is being nuked at all angles by Netflix, Amazon, and Hulu

TV viewing in the US is plummeting.

People are still watching TV programming, but the way in which they choose to watch it is transforming rapidly. The rise of on-demand subscription services like Netflix, Hulu Plus, and Amazon Prime Instant Video are cutting into TV ratings, new data from Nielsen shows.

As TV ratings fall, so does TV advertising revenue and the associated profits, as companies like Fox have experienced this year.

Nielsen's Q4 "Total Audience Report" released on Wednesday shows a huge drop off in traditional TV viewing as consumers ditch old-fashioned scheduled programmes.

American adults still spend a huge amount of time watching TV each day. But the overall levels of viewing (which includes live TV + time-shifted viewing) declined 4.6% year-on-year. That's compared to a 4.2% year-on-year decline in Q3 and a 2.1% decline in Q2. The level of decline is accelerating.

Excluding time-shifted viewing, live TV consumption was down 5.5% year on year.

Among younger audiences, the drop off in TV viewing was even more severe: 16% among 18 to 24-year-olds, and 10% among 12 to 17-year-olds.

The steep drop off of traditional TV viewing is correlated with a sharp rise in the number of US homes with access to a subscription video on demand service like Amazon, Hulu, or Netflix. Nielsen says 40% of US homes had access to a subscription video on demand service in Q4 (the pink segment in graph below), up from 36% in the same quarter the previous year.

Of those with access to video streaming services, Netflix is the most popular option.

As you may have noticed from the previous charts, the amount of media consumption per day is actually up as consumers have more choice about the way in which they view content. And the more devices and services they have, the more content they consume.

Elsewhere, the amount of time spent on the web and with apps across devices among adults over 18 years old was up 32%, according to estimates from Pivotal Research, which uses Nielsen's data as a guide. Pivotal says this now equates to 44% of the time spent with TV versus 32% in the year-ago period (although, intriguingly, on Pivotal's estimates, this represents a sequential decline from 48% in the third quarter.)

An opportunity for TV networks?

Brian Wieser, senior research analyst at Pivotal Research, says in a note: "While declines should level off eventually (and viewing levels would certainly look better if tablets and out-of-home viewing were included in the data; a break-out of viewing of TV content in digital environments would also probably convey something more favorable for legacy providers of TV content), a concern is that if reported viewing levels continue to fall at these levels and if the industry is unable to generally make its case for why advertisers should use the medium, marketers who might otherwise have continued to focus their spending on TV may incrementally look toward other alternatives - namely digital media at a broader level."

However, Wieser adds that this is a "secondary concern" relative to the broader state of TV advertising, which Pivotal believes is mostly due to the fact that marketers are maintaining tighter cost controls broadly across their entire advertising budgets.

Nielsen's report could read like the start of an obituary for TV. But TV networks should instead be looking at the opportunities. The US economy is improving, meaning there is more money in consumers' pockets to subscribe to services like Netflix and buy the types of devices that is fuelling their increase in content consumption (and buy the products advertisers advertise against that content.)

There might be new competitors in the space, but there's also more ways to get content (and advertising) in front of viewers than ever before - and they're actively choosing to consume more of it.

And that's why - as ratings are getting hammered - more and more traditional TV companies are opting to launch streaming services. Most recently, HBO announced HBO Now will be available on Apple devices from April.