Cable television operators in the United States lost 741,000 basic video customers in the third quarter of 2010, the largest quarterly loss for decades. They were not all lost to gains by satellite and telecoms competitors. Overall, SNL Kagan reported that the multichannel market contracted by 119,000 customers, after losing 216,000 subscribers the previous quarter, which saw the first ever net loss. While for some, two consecutive quarters of losses constitute a trend, the reality may have more to do with the state of the economy. Needless to say, research commissioned by the cable industry suggests that cord-cutting is overstated.
Cable operators share of subscribers fell from 62.9% to 60.3%, while satellite rose 1% to 33.2% and telco operators grew to 6.4%, up from 4.7% a year previously.
Cable companies point to the weak economy and high unemployment, according to SNL Kagan analyst Ian Olgeirson. “However, it is becoming increasingly difficult to dismiss the impact of over-the-top substitution on video subscriber performance, particularly after seeing declines during the period of the year that tends to produce the largest subscriber gains due to seasonal shifts back to television viewing and subscription packages.”
While there seems to be no denying that cable is losing basic tier subscribers while online video services are gaining momentum, there is as yet little evidence that the two are causally related.
It is considered cool to talk about cord-cutting, with the assumption that customers are cutting their cable television bill by viewing video online. While this may be true of a vocal minority on the web, it still does not represent the mass audience for television.
For executives, analysts and online commentators, Precious is an Oscar winning movie that they might stream on Netflix, rather than a way of life.
The reality is that there is approaching 10% unemployment in America, and it is much higher for those that are not white or college educated. The national figure is 17% if you include all those that are out of full-time work, and over 20% in states like California, as repoprted by Bureau of Labor Statistics. Foreclosure auctions were scheduled for nearly 140,000 properties in October alone, according to RealtyTrac.
In that economic climate it is little surprise that pay-television is losing customers, but a net loss of 120,000 in a quarter represents only 0.12% of the 100 million pay-television homes in America, out of a total universe of 116 million television households. In that context the cable business remains remarkably robust and resistant to recession.
A study commissioned by the cable television industry and conducted by Nielsen surveyed those that watch television programmes or movies from the internet on their televisions, a group it estimates represents around 11% of the population. The responses suggest that 84% are watching as much, if not more, regularly scheduled television since they started streaming or downloading shows. Furthermore, 92% subscribed to a pay-television service and only 3% were thinking about switching away.
“We’ve learned that new technologies are providing additional opportunities for viewers to access TV shows and movies, at their convenience,” said Char Beales, the president and chief executive of CTAM, the Cable & Telecommunications Association for Marketing. “But it’s supplementing viewing of regularly-scheduled TV, not replacing it.”
The Life is a Stream research on viewing of internet video on television was conducted by The Nielsen Company in August 2010, based on an online panel of 18-49 year-olds that watched at least five hours of television a week and had watched a full length television show or movie from the internet on the television in the previous month.