Streaming Video Delivers Blow To Paid Cable
- by Gavin O'Malley @mp_gavin, January 11, 2013
Driven by the rise of
streaming video and better over-the-top technology, cable-led paid-TV services peaked in 2011, and are now on track to decline through 2017.
That’s according to new findings and
forecasts from research group TDG, which reports that paid-TV subscriptions topped out at about 101 million in 2011, remained virtually unchanged in 2012, and will sink to less than 95 million by
2017.
“Netflix and Hulu Plus are one part of it,” Michael Greeson, director of research at TDG, said regarding the fate of paid TV. “But those services are still
supplementary for most consumers.”
What will really accelerate the demise of pay TV is when consumers adopt new OTT technology -- from Apple and Intel -- as their primary
entertainment services, according to Greeson.
“The arrival of this next generation of services is what’s going to change things,” Greeson. “They’ll be
live in one year,” he predicted.
Today, 87% of U.S. broadband households currently subscribe to a pay-TV service -- a decline of almost five percentage points since 2010,
according to TDG.
More to the point, a growing number of broadband subscribers are now doing without pay-TV services altogether, having either “cut the cord” or never
signed up at all, Greeson points out.
In total, TDG considers 13% of U.S. broadband households -- 10 million -- to be “pay-TV refugees,” of which 2.6 million have never
subscribed to a pay-TV service. By its estimates, 7.4 million once subscribed to pay TV but have since cancelled the service.
The majority of cord-cutters (71%) cite the high cost of
paid TV as their primary reason for ditching such services, while 28% cite free online video-on-demand services such as Hulu. In addition, 25% cite paid VOD services like Hulu Plus and Netflix as
reason enough for cutting their cords.
For its research, TDG used an online panel of 500 U.S. adult broadband users, which randomly selected from an online panel of several million
consumers.
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ROKU has their coffin nails ready for Cable and DISH...
I've been a “pay-TV refugee” for two years now thanks to Roku and see no reason to ever go back...besides that, my little digital antenna picks up over 25 free local TV channels out of the air...luck of location. Bottom line - I've saved nearly $5K in cable fees and the choice of HD content is overwhelming, don't be afraid, cut the cord!
95 million times $120 a month sounds like a pretty good business to me....
Kevin - by your same argument though, >6M x $120/mo is a significant revenue hit.
Personally, I wouldn't bet on knowing anything about where we'll be in 2017. Very few of the assumptions made in 2007 hit the target, and the pace in this industry is only accelerating. 5 year projections are a standard in most established industries - they're ballpark guesses at best in video.
Sorry Jeff, was reacting to the nutjob in the article who used the phrase "the demise of Pay TV." At 1% loss per year, Pay TV is on target to be a verrrrrrry slowwwwwww death "spiral." I'll give you all this though - you will, someday, be proven correct on the thesis. PS Hope there will be at least a few pundits this year who explain just exactly how the video industry survives this change from an economic POV. If the consumer doesnt pay for it, who does?
The piranhas see the blood in the water, the sharks are circling - Walmart, Amazon, Google,Apple, Microsoft, Intel, Sony, etc. I think changes could come on an exponential scale. I see it as a hybrid primarily much like early days of satellite. https://docs.google.com/viewer?a=v&pid=sites&srcid=ZGVmYXVsdGRvbWFpbnxjdW9pcmVudHxneDoyOWZiMTczMzJmZjRmMzNk
The writer left out the last line of the release, which should provide some clarity on the "demise of pay-TV issue":
“But let’s not get carried away: the loss of six million subs in the next five years is hardly the end of the world for traditional pay-TV."
As Kevin noted above, this is hardly "the demise of Pay TV."
I think the OTT players will offer consumers services below cost, get them to cut their cords, and once they are on board, they will start jacking up prices again to make things profitable. Only the deep-pocket players can do this. Unfortunately it is going to kill many cable companies unless otherwise they start responding wisely, aggressively and in a more timely manner. Their TV Everywhere service is not widely used by their subscribers even though it is several years since its launch. Many subscribers are not even aware of such a service. PayTV providers have been successful in one thing - Internet service. They have been aggressive at it. Unfortunately the same momentum has been lacking on the video side.