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Report: Cord cutting not a worldwide phenomenon – yet

Thu, 02/03/2011 - 10:34am
Mike Robuck

With earnings reports by video providers on the near horizon, we're sure to hear more over the coming weeks about the impact of "cord cutters" on video providers' basic subscribers, but a new report found that cord cutting has had a limited impact to date worldwide.

United Kingdom-based Informa Telecoms & Media, in what it said was the first-ever global analysis of cord cutting, found that subscribers who drop their video subscriptions in favor of over-the-top streamed content on the Internet have had a limited impact on the pay-TV market.

Informa calculated that there were 1.2 million cord cutters worldwide in the last year, equivalent to just 0.18 percent of the pay-TV total.

"While the impact of cord cutting on pay TV has been extremely limited to date, this will change as OTT services will continue to improve and become increasingly attractive. Connected TVs and set-tops will allow easier access to these services, and our forecasts therefore anticipate the number of cord cutters growing to 16.1 million in 2015. That's about 2 percent of the total pay-TV subscriber base," wrote Adam Thomas, senior analyst at Informa Telecoms & Media.

Informa's research did find that 36 percent, or 426,000, of the cord cutters were based in the United States. (Here's a look at some of those subscriber losses from last year, as well as a CTAM study that found over-the-top services weren't hurting linear viewing.

While Informa anticipated more cord cutting worldwide over the next five years, it found that "there is no suggestion of the global meltdown of pay-TV subscribers and business models suggested by the more vociferous proponents of OTT."

The potential impact of OTT services could hinge on broadband penetration; Informa said several markets were characterized by higher broadband penetration than that of pay-TV penetration.

"We are already seeing significant numbers of cord cutters in China, as households are attracted away from cable and IPTV by OTT services such as Tudou and Youku. While these services contain a fair proportion of pirate content, they also have some legitimate carriage deals. In China, there is always a risk that regulatory intervention will radically alter a market but, for now, OTT is emerging as a fully fledged alternative to the traditional platforms," wrote Thomas.


Cord-cutters by region 2010-2015 (in 000)
Region

2010

2011

2012

2013

2014

2015

Asia Pacific

251

753

1,448

2,647

4,209

6,274

Europe

395

843

1,610

2,645

3,906

5,542

North America

434

707

1,015

1,519

2,152

2,976

Rest of the World

113

250

426

646

922

1,283

Global

1,194

2,552

4,498

7,458

11,189

16,074

Source: Informa Telecoms & Media

While Informa's report summary didn't mention content agreements, the future impact of OTT services will also hinge on the content deals they can put in place.

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