Where Did Everyone Go?
According to SNL Kagan, it marked the first time that such a decline occurred in consecutive quarters; the industry lost 216,000 customers in the second quarter of 2010.
So, what happened to those lost multichannel customers? SNL Kagan didn't offer a granular analysis on that, but acknowledged that operators continue to point to the weak economy, high unemployment, and the churning of consumers who go back to getting video freely over the air, which is considered another form of cord-cutting.
And what about the emergence of "over-the-top" video options? SNL Kagan believes it's playing a role.
Ian Olgeirson, a senior analyst with the firm, opined that "it is becoming increasingly difficult to dismiss the impact of over-the-top substitution on video subscriber performance, particularly after seeing declines during the period of the year that tends to produce the largest subscriber gains due to seasonal shifts back to television viewing and subscription packages."
Cable was hit particularly hard in the quarter, losing 741,000 basic video subscribers, the largest quarterly drop since SNL Kagan started compiling that data in 1980. US Cable ended the quarter with a 60.3 percent share, down from 62.9 percent a year earlier. Telco TV (476,000 sub adds) and satellite TV (145,000 adds) fared better.
If anything, the report reignited the cord-cutting debate, with many believing it proves that the trend has graduated from mythical status.
The cable industry has largely downplayed the notion of widespread cord-cutting brought on by OTT, instead blaming losses on the bad economy and housing markets. Still others blame the exodus on ever-increasing subscription fees.
But it's not just the MSOs that are reluctant to believe that cord-cutting is to blame. Will Richmond, a new media industry analyst who runs VideoNuze, says it's hard to reach a conclusion until there's more hard, reliable data to prove whether cord-cutting is among the primary causes of those losses.
Any cord-cutters in the house? What's your reason?
— Jeff Baumgartner, Site Editor, Light Reading Cable