The good news for U.S. cable operators in 2012 is that they posted their best third-quarter performance in terms of video subscribers in at least two years.
The bad news is that the operators still lost nearly half a million subscribers during the period as competition from IPTV services like FiOS and U-verse continued to diminish the cable companies’ opportunity to add new households to their customer rolls. Even worse for the U.S. cable operators, their net subscriber losses for the full year of 2012 are expected to exceed those in 2011, according to an IHS Screen Digest Television Intelligence Report from information and analytics provider IHS.
U.S. cable operators lost a net total of 460,000 video subscribers in the third quarter of 2012. This compares to a loss 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.
U.S. 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.
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 which dissuaded a portion of new households from even considering taking a pay-TV subscription. These new households that are eschewing pay TV in favor 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. For the full year 2012, U.S. cable subscribers are anticipated to shrink to 56.6 million, down three percent from 58.4 million in 2011. This compares to a 2.8 percent contraction in 2011.
The year 2012 will represent the ninth consecutive year of decline in U.S. cable video subscribers, going back to 2004.
While the video portion of the cable business continues to struggle, the U.S. cable operators are making gains in two other endeavors: high-speed data and voice. Data subscrhibers in the third quarter rose by 983,000, while voice increased by 276,000.
The gains meant that total U.S. cable subscriber revenue-generating units (RGU)—including video, data and voice—rose by 0.4 percent in the third quarter compared to the second.
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