Although US cable operators have some good news to celebrate in 2012, having posted their best third-quarter performance in terms of video subscribers in at least two years, they still lost nearly half a million subscribers during the period as competition from IPTV services from telcos such as Verizon FiOS and AT&T U-verse continued to diminish the cable companies’ opportunity to add new households to their customer rolls.
Even worse for them, according to IHS Screen Digest, their net subscriber losses for the full year of 2012 are expected to exceed those in 2011, according to the information and analytics provider’s Television Intelligence Report.
The operators lost a net total of 460,000 video subscribers in the third quarter of 2012. This compares to a reduction of 512,000 in the third quarter of 2011 and a 739,000 plunge during the same period in 2010. It also represents an improvement compared to the 599,000 drop in net subscriber additions in the second quarter of 2012, as presented in the figure attached.
“US cable operators in the third quarter trimmed their video subscriber losses by using heavy promotional bundles as well as service initiatives such as TV Everywhere, which offers features like live linear streaming of cable networks in-home and video-on-demand service in and out of home, through the open Internet,” said Erik Brannon, analyst for television research at IHS. “However, subscriber numbers still decreased in the third quarter because the attractiveness of Over-The-Top (OTT) services delivered over the open Internet, and an ailing economy also dissuaded a portion of new households from even considering taking a pay-TV subscription. These new households that are eschewing pay-TV in favour of OTT – which could be called ‘cord nevers,’ rather than ‘cord cutters’ – represent a lost segment of the market for pay-TV operators.”
As the cable operators’ promotions from the fourth quarter of 2011 expire, their video subscriber losses are expected to increase, says IHS Screen Digest. For the full year 2012, US cable subscribers are anticipated to shrink to 56.6 million, down 3 per cent from 58.4 million in 2011. This compares to a 2.8 percent contraction in 2011.
IHS Screen Digest says the year 2012 will represent the ninth consecutive year of decline in US cable video subscribers, going back to 2004. While the video portion of the cable business continues to struggle, the operators are making gains in two other endeavours: high-speed data and voice.
Data subscribers in the third quarter rose by 983,000, while voice increased by 276,000. These gains mean that total US cable subscriber revenue generating units (RGUs) – including video, data and voice – rose 0.4 per cent in the third quarter compared to the second.