• by Wayne Friedman , May 19, 2008

Multichannel video retailer providers, especially traditional cable system operators, will find it hard to grow their businesses in the next five years. Monterey, Calif.-based media researcher SNL Kagan says overall multichannel video businesses will only grow at only a 2.1% rate annually, reaching 108.5 million U.S. homes in 2012.

A silver lining for cable operators: the February 2009 change to all digital signals from analog should give that business more households, grabbing 10% of the existing over-the-air homes. SNL Kagan says cable will get the majority, with satellite and telephone companies splitting the remainder.

The slow-growing cable industry will remain dominant--but will lose market share due to increased competition from phone companies and satellite providers. SNL Kagan says cable's market share will drop from 64% currently to 59% in 2012. Phone companies are expected to make the biggest gains, seizing a 9% market share from 3% currently.

Cable can stem the tide, says Kagan, depending on how quickly it can reclaim analog channels to free up bandwidth to provide greater selection of digital video programming packages.