Commentary

Fewer Paid Subscribers For TV: Long-Term Worry Or Just A Hiccup?

by Wayne Friedman , Staff Writer, August 24, 2010

The market for paid television -- basic cable, satellite and teleco packages -- has stopped growing for the moment. Should we be concerned?

Admittedly, the decline is slight -- just 0.2% in the second quarter 2010 versus the same period in 2009. That comes to losing 216,000 customers, for a current total of 100.1 million, according to SNL Kagan. Still, it's the first time in history this market has declined, according to the media researcher.

On the surface, quick-reacting TV analysts may say that free video on the Internet could be the reason for the decline. But looking deeper, it's really about the still-suffering economy -- as well as the movement to digital for those still-analog TV homes. Those viewers apparently took advantage of initial cable/satellite promotional packages and then failed to renew their subscriptions.

It has been no secret that cable operators have been losing existing standard basic cable customers but have been gaining in digital cable customers. Overall cable is losing share, down to 61% from around 63%.

Telecos' video programming services, on the other hand, have been growing the most -- around 6% in share so far from just over 4%. Satellite operators have been growing less so -- around 1% year over year.

All this says a lot about the economy as whole -- about new home sales, about those big shifts in how we get our video into the home. There is video saturation via older technologies.

Cable companies have done a great job in expanding into other digital platforms beyond video -- into broadband, home phone, and mobile.

What makes this dramatic is that multichannel programming services have been the bellwether metric for all of our seemingly ever-expanding needs/wants for entertainment and media. Even with the rise of the Internet over the last 15 years, multichannel programming services have grown -- even during the previous recession.

Perhaps this is a little glitch in the whole process. Then again, there are all these new over-the-air digital TV providers that are looking to take away even more business from traditional pay TV monthly sellers -- with packages as low as $15 a month.

If there is an ominous future for traditional ways of getting video, it comes from looking at the next wave of TV viewers -- those under 24. Research shows that under 40% of those viewers watch TV in prime time, and that number is dropping.

OK. Maybe we should be concerned.

4 comments about "Fewer Paid Subscribers For TV: Long-Term Worry Or Just A Hiccup?".

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William Hughes from Arnold Aerospace, August 24, 2010 at 12:39 p.m.
I have not heard any positive comments from anyone who subscribes to a Pay-TV Service, be it Cable, Satellite or whatever in recent years. The two biggest Complaints I hear about what's wrong:
1. Too Much Advertising.
Many Programs will run six to eight minutes, then barrage viewers with blocks of Commercials lasting up to five minutes at a time. Over 20 minutes of each hour can consist of Commercials. To make room for them many Vintage shows are heavily edited, with up to 1/3 of the show's origional content cut out. On top of that are the On-Screen Advertisments that occur during the program, "Pop-Ups", Scrolls and Banners that obscure the screen, sometimes accompanied by Sound Effects that disrupt the Program being shown.
2. Lack of Variety
Its easy to determine what Channels are owned by the same Corperation, as many of them show the Same Program! I've seen the same Episode of the Same TV Show on as many as five supposedly DIFFERANT Channels simaltaniously (And I'm not talking about a Presidental Address). And the shows are repeated past the point where they became STALE. Some Channels run the same Show over a "Marathon" that can last from a few hours to several days. Like that particular show? Then knock yourself out! Dislike? Too Bad, that's all their showing.Very often a Channel will announce a "New Show" only to show a Series that ran on another company's Channel until their "Rights" to it expired. What good are 100+ Channels when many of them show, essentially THE SAME PROGRAMMING?
Add to that the Choices now available over other mediums, and it's no wonder what's going on. People are throwing in the towel, and looking elsewhere to get the Entertainment they want.
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Douglas Ferguson from College of Charleston, August 24, 2010 at 12:47 p.m.

Yes, and maybe the plummeting real estate and stock market are just a little glitch.

Joe Biden said, "Give us time. Give us 18 months"

That was 18 months ago.

Bruce May from Bizperity, August 24, 2010 at 2:24 p.m.

I have been watching the entertainment habits of my teenage children for the last ten years (this long term research project has just come to an end as my youngest son just went off to college last week). What caught my attention from the very beginning of this little project was the fact that my kids never wanted to leave their bedrooms, which they had transformed into custom designed entertainment centers, with computers, game consoles, and an assortment of media devices and solutions that allow them to consume media in more ways than you can count. The family living room soon became a wasteland. Meanwhile, their bedrooms became the center for a host of gaming activities. The majority of their time was spent playing games, not watching TV. Prime time didn’t even register on their radar. If they watched video it was on YouTube. They used the Internet to download music, play online games, watch short form video, and occasionally do some homework. Oh yes, they had television’s too, but I never saw them turn them on. The only time I ever caught them watching TV was when they turned on the set in the kitchen while they grabbed a quick meal… and they almost never finished watching a complete show. If you are in television, be concerned, very concerned.

George McLam, August 24, 2010 at 4:26 p.m.

William Hughes' comment about the amount of time being used for advertising is right on. It is bad enough that a show which was originally 50 minutes is cut down to 42 to fit in more ads, but much of the broadcast time is just used for promotion (not income). Then anytime I see a graphic superimposed or sound not from the original program, I consider that to be "non-program" time as well.

All of the above is bad enough but then we are expected to pay for it. I have long wondered why consumers have put up with this.

My pictures look better than yours because I do not pay someone to deliver them to me. While there are a couple of "pay channels" I would like to receive, I cannot convince myself that it would be a "good value".