OTT video substitution for 4.5m US households in 2011

An estimated 4 per cent of occupied US households – 4.5 million homes –will have substituted Internet video options for cable, satellite or telco TV service by the end of 2011, according to research firm SNL Kagan.

“Though the thin slice of households relying [on OTT] substitution could be dismissed as evidence of a lack of momentum behind cord cutting, the 4.5 million households it represents are not inconsequential, particularly in light of the basic subscriber declines for the cable industry,” the firm wrote in a report.

Multichannel substitution via over-the-top delivery will grow from 2.5 million households at the end of 2010 (2 per cent of occupied US homes) to 12.1 million by 2015 (10 per cent of all households).

Penetration of traditional pay television services may have peaked in 2009, according to SNL Kagan.

At the end of 2010, an estimated 84.9 per cent of the occupied US households subscribed to a multichannel package (after eliminating the overlap of customers with multiple subscriptions), the research firm said. The decline from nearly 86 per cent at the end of 2009 illustrates “the potential peak in multichannel penetration.”

SNL Kagan projects continued absolute growth in pay-TV subscribers, but the pace is “not expected to keep up with occupied household formation, leading to a long-term decline in penetrations for multichannel services.”

The research company expects 12 million households, roughly 10 per cent, to go without cable, satellite or telco video service by 2015.

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